China's exports rebound, but shipments to US plunge 29%
What's the story
China's exports have returned to growth in November, after an unexpected contraction in October. However, shipments to the US fell by nearly 29% year-on-year (YoY), marking the eighth consecutive month of double-digit declines. Overall, China's exports were up 5.9% on a dollar basis in November at $330.3 billion, better than economists' estimates and an improvement from October's 1.1% contraction.
Surplus surge
Trade surplus in 11 months
China's trade surplus for the first 11 months of this year has surpassed the $1 trillion mark, at nearly $1.08 trillion. This is a record high for any single year and exceeds last year's total surplus of $992 billion, according to official data compiled by FactSet. The customs data highlights a widening gap between China's overall exports and imports during this period.
Market diversification
China diversifies export markets amid US shipment decline
Despite the fall in exports to the US, China has seen a surge in shipments to other regions such as Southeast Asia, Africa, Latin America, and the European Union. In November, China's imports grew by 1.9% to over $218.6 billion, better than October's 1% growth. This comes even as a prolonged slump in the property sector continues to weigh on consumer spending and business investment.
Truce effects
US-China trade truce and its impact on exports
A year-long trade truce between China and the US was reached at a meeting between President Donald Trump and Chinese leader Xi Jinping in late October. The US has cut tariffs on China while China has agreed to lift export controls on rare earths. "It's likely that November exports have yet to fully reflect the tariff cut, which should feed through in the coming months," wrote Lynn Song, ING Bank's Chief Economist for Greater China.
Economic outlook
China's factory activity contracts for 8th consecutive month
China's factory activity contracted for the eighth straight month in November, an official survey showed. Economists say it is too early to tell if external demand has truly rebounded after the US-China trade truce. However, with strong exports, most economists expect China to meet its economic growth target of around 5% this year.
Strategic focus
Focus on advanced manufacturing and future plans
After a high-level meeting in October, Chinese leaders had emphasized a focus on advanced manufacturing for the next five years. An annual economic planning meeting was held on Monday, led by Xi, to chart out growth plans for 2026. Despite persistent trade tensions and protectionism, some economists believe China will continue to gain export market share in the coming years.