- China’s export growth probably lost some steam in November amid weakening demand and high-cost pressures on exporters, while imports likely slowed slightly and concerns over the Omicron variant weighed on the outlook, a Reuters poll showed on Monday.
- Imports were forecast to have risen 19.8% from a year earlier, the poll showed, compared with 20.6% in October.
- Analysts expect there will be more supportive policy measures in the coming months.
China’s export growth slowed somewhat in November due to weaker demand and strong cost constraints on exporters, while imports dropped marginally and fears over the Omicron variant weighed on the outlook as reported by Reuters.
Blooming exports
Exports in November were expected to have risen 19.0% from a year earlier, according to the median forecast of 26 economists in the poll, after growing 27.1% in October.
Imports were forecast to have risen 19.8% from a year earlier, the poll showed, compared with 20.6% in October.
China’s booming exports have outperformed expectations for much of this year, but analysts expect them to slow eventually as an overseas surge in demand for goods tapers and high costs pressure exporters.
“After contributing 40% of the 9.8% y-o-y GDP growth in the first three quarters and half of the 4.9% GDP growth in Q3 this year, exports’ contribution to China’s real GDP growth may soon fall to zero,” said analysts at Nomura in a note last month.
The world’s second-largest economy has staged an impressive rebound from the pandemic but there are signs the recovery is losing steam.
Power shortages, regulatory crackdowns and debt troubles in the property sector are weighing on China’s recovery.
Policy measures
More helpful policy measures are expected in the coming months, according to analysts. China will reduce the number of cash banks must retain as reserves “in a timely manner,” according to official media on Friday.
A private business survey showed that factory activity slid back into contraction in November as low demand and high costs impacted manufacturers, while an official survey was more upbeat.
In October, factory-gate inflation in China reached a 26-year high as coal costs rose amid a power shortfall in the country’s industrial heartland, though power shortages have since alleviated.
Although no cases of the Omicron COVID-19 variant have been reported in China, its development could put greater pressure on the country’s rigorous zero-tolerance policy on coronavirus illnesses.
“The government has opted to expand the length of quarantine requirement for incoming ship crews in China, where COVID regulations have remained tight,” Barclays analysts said in a note on Monday.
“This could raise freight prices once more, potentially causing additional shipping delays.”
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Source: Reuters
