China's Export Decline Deepens... Increasing Dependence on Domestic Market (Comprehensive)

Imports Stop Declining After One Year with a Surprise Increase
Focus on Key Indicators Such as Retail Sales

Due to sluggish demand caused by delayed economic recovery in major countries, China's exports in October continued to decline. On the other hand, imports showed a surprising increase, indicating a growing reliance on domestic consumption in the Chinese economy.

According to the General Administration of Customs of China on the 7th, China's export value in October was $274.8 billion (approximately 359.988 trillion KRW), marking a 6.4% decrease compared to the same month last year. This figure is below both the previous month's figure (-6.2%) and the forecast (-3.1%). The decline in China's exports has persisted for six consecutive months since May, influenced by delayed global economic recovery and U.S. sanctions against China.

[Image source=AFP Yonhap News]

In the same month, imports amounted to $218.3 billion, increasing by 3.0% year-on-year, significantly surpassing both the forecast (-5.4%) and the previous month (-6.2%). Imports had shown negative growth rates continuously from October last year until September but have risen for the first time in a year. This is interpreted as a result of the recent recovery in China's domestic demand.

Looking at major items, soybean imports increased by 14.6% compared to the previous year during the first ten months of this year, crude oil imports rose by 14.4%, and coal purchases jumped by 66.8%. Meanwhile, the China Import and Export Fair (Canton Fair), considered a 'barometer of exports,' recently concluded transactions worth $22.3 billion, showing a sluggish trend compared to the pre-COVID-19 spread period (approximately $29 billion).

Due to the decline in exports and recovery in imports, China's trade surplus in October recorded $56.53 billion, falling short of the forecast ($82 billion). It also significantly decreased compared to the previous month ($77.71 billion). This is the lowest level in one year and six months since April last year ($51.12 billion).

Xu Tianchen of The Economist Intelligence Unit commented on the export figures to the Hong Kong South China Morning Post (SCMP), stating, "This indicates uncertainty about the recovery of external demand." He added, "The increase in imports may signify a rebound in domestic demand, but due to the depreciation of the yuan, a sharp surge in imports is unlikely, so the rebound will be gradual."

Jiang Ziwei, Chief Economist at Pinpoint Asset Management, said, "With the economic momentum in the U.S. and Europe slowing down, export growth remains sluggish," and forecasted, "External demand is likely to weaken further over the next six months." Jiang added, "China needs to rely more on domestic demand to stimulate growth. The recovery in import growth is positive," but also noted, "It is uncertain whether this import rebound truly reflects an improvement in domestic demand." He further emphasized, "Other data points such as retail sales should also be monitored," and predicted, "With fiscal policy becoming more proactive, domestic demand recovery is likely within the next few months." China is scheduled to release key economic indicators such as industrial production, retail sales, and unemployment rate for October on the 15th.

This content was produced with the assistance of AI translation services.