China’s import surprise offers hope as recovery risks linger

Beijing | China’s trade data for October offered a mixed picture for the economy’s outlook, as an unexpected pick-up in imports was offset by signs that global demand for Chinese goods is struggling to gain traction.

Imports rose 3 per cent from a year earlier last month, the first gain in eight months and bucking the consensus forecast for a drop. Overseas shipments dropped 6.4 per cent, worse than expectations. The resulting trade surplus was $US56.5 billion ($88 billion).

The data underlines the fragility of the recovery in the final three months of 2023. Import growth suggests domestic demand may be recovering, but the decline in exports was a big disappointment for a period that should have been more favourable: this October compared to a month in 2022 when the pandemic and controls to contain it disrupted logistics and production.

“Exports conditions remain fragile,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered. “We’ll need more real activity data to verify whether the strong imports data indicates a recovery in domestic demand.”

Investors are assessing the sustainability of China’s economic recovery. While figures recently have shown improvement, the rebound remains uncertain amid low consumer and business confidence. Economic data for October pointed to weakness in the manufacturing and services sectors. Official statistics this week are likely to show consumer prices slid back into deflation last month.