(Bloomberg) -- China’s export growth surged in October to the fastest since July 2022, extending a months-long boost to the economy that may be jeopardized by Donald Trump’s election and his tariff threats.
Exports rose 12.7% from a year earlier to $309 billion, the customs administration said Thursday, significantly exceeding any economist’s forecast. Imports fell 2.3% to $213 billion, leaving a trade surplus of $96 billion, the third-highest month on record.
Chinese stocks extended their gains in the afternoon session. The onshore benchmark CSI 300 Index rose as much as 1.2% and a gauge of Chinese stocks listed in Hong Kong jumped as much as 1.8%. Both indexes ranked among the top performers in the Asia Pacific region.
The stream of exports has helped make up for a weakness in domestic demand, but it has also sparked a backlash from the US, South America and Europe against the influx of cheap goods. In response, an increasing number of nations have raised tariff barriers against goods such as steel and electric vehicles.
“This may partly be driven by exporters trying to front-load shipments in order to mitigate the damage of a potential trade war next year,” said Zhang Zhiwei, president and chief economist at Pinpoint Asset Management. “I think the economy will improve modestly in the fourth quarter, but the trade war may start in the first quarter of next year. We cannot rely on exports to carry China’s economy.”
Exports to the US rose 8.1%, the most in three months. Shipments to most markets climbed, with double-digit increases to Asean, the European Union, South Africa and Brazil. Shipments to Russia jumped almost 27%, the fastest growth this year.
Trump’s return to the White House will further complicate the outlook. The president-elect has threatened to put tariffs of as much as 60% on Chinese goods, a level that Bloomberg Economics predicts will decimate trade between the world’s biggest economies.
Any new barriers would mean China might need to find new markets for the products it currently sells to the US. Last year, Chinese companies shipped $500 billion in goods to the US, accounting for 15% of the value of all its exports.
Zichun Huang, China economist for Capital Economics, said those levies would hurt China’s export sector, but he expects emerging markets to offset a sizable portion of the loss in demand from the US.
“Their impact would be less significant than many fear – we think they could lower export volumes by around 3% – and may not be felt until the second half of 2025,” Huang wrote in a note.
What Bloomberg Economics Says...
“With the global economy slowing and Donald Trump’s return to the White House now increasing chances of new tariffs that our analysis suggests could decimate US-China trade, urgency is growing for China’s policymakers to implement planned stimulus to revive domestic demand.”
— Eric Zhu, economist
Read the full note here.
The brisk growth in exports may help China reach its growth target of around 5% this year even before Beijing fully rolls out a barrage of stimulus measures aimed at shoring up domestic demand.
Over the past six weeks Beijing has announced measures to boost the economy, starting with direct support for the stock and housing markets and likely to continue with financial support for indebted local governments expected within days.
But until domestic demand perks up, Chinese companies in many industries are dealing with overcapacity that’s been forcing them to cut prices. Export prices have been falling for more than a year, mirroring the collapse in domestic producer charges that’s slashed industrial profits.
October has historically been a weaker month for exports before a final rush in the last two months of the year. The rise was off a weak base in the same period a year earlier, when shipments abroad dropped almost 7%.
--With assistance from Josh Xiao, Fran Wang, Shadab Nazmi and Zhu Lin.
(Updates with market reaction in third paragraph.)
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