Supply chains to back exports

Experts link the sector's resilience to trade expansion, but see slower growth next year

China's resilient industrial and supply chains, which enabled better-than-expected exports so far this year, will help withstand growing downward pressure and sustain upward export momentum in coming months, experts said on Tuesday.

They also said the robust growth in imports indicated signs of accelerated expansion of the Chinese economy.

Data from the General Administration of Customs showed on Tuesday that China's foreign trade in the first 11 months of this year was worth 35.39 trillion yuan ($5.56 trillion), up 22 percent year-on-year, and more than the 32.16 trillion yuan recorded for the whole of last year.

Over the 11-month period, China's exports soared by nearly 22 percent year-on-year to 19.58 trillion yuan. The figure was almost 26 percent higher than that in the same period of 2019.

Imports grew around 22 percent year-on-year to 15.81 trillion yuan. The trade surplus surged more than 20 percent year-on-year to 3.77 trillion yuan.
In November alone, exports grew by 16.6 percent year-on-year to 2.09 trillion yuan, while imports surged by 26 percent to 1.63 trillion yuan.

On a month-on-month basis, exports and imports grew by 7.6 percent and 16.6 percent, respectively, in November, reversing the 2.1 percent and 10 percent month-on-month declines seen in October.

"On the high comparison basis of strong export performance last year, China has registered quite good export performance this year, which is a testimony to the nation's strong resilience in supply chains," said Hu Yifan, regional chief investment officer and head of macroeconomics for Asia-Pacific with UBS Global Wealth Management, one of the world's largest wealth managers.

Hu predicted that China's export performance next year might not be as strong as it was this year. Amid the disruption of global supply chains by the emergence of the Omicron variant of the novel coronavirus, she said, it will still be at high levels.

Last year, Chinese exports were strongly supported by COVID-19-related products, including medical devices, masks, cotton and cotton cloth, and electronic products used for working remotely, she said.

Owing to the resurgence of COVID-19 in Southeast Asia, and thanks to the economic recovery in developed economies, export demand for China's labor-intensive products like apparel has also been restored this year, she said.

GAC data showed China's exports of mechanical and electrical products surged 21.2 percent year-on-year to 11.55 trillion yuan in the first 11 months, accounting for 59 percent of the total.

Labor-intensive product exports were worth 3.56 trillion yuan, up more than 10 percent year-on-year and accounting for more than 18 percent of the total.

Zhou Maohua, an analyst at China Everbright Bank, said the robust growth in imports was partly due to recovery in economic activities in China. This was especially obvious since October, while the plunge in some commodity prices in November also stimulated imports.

Zang Chengwei, assistant professor with the Institute of World Economics and Politics, which is part of the Chinese Academy of Social Sciences, predicted that this month will see a new round of rapid growth in China's foreign trade.

The export growth rate, however, is likely to slow next year, due to factors like the high comparison base this year, probable production recovery in neighboring economies and transfers of orders to other countries, and foreseeable lower product prices, he said.