The General Administration of Customs will release China's import and export data for October in the near future.
Many institutions predict that the year-on-year growth rate of exports in October may continue to fall due to the weakening external demand and the rising base; The decline of external demand may provide China with relative supply advantage. In October, the price of imported bulk commodities fell back or slowed down the growth of imports. Epidemics and real estate were still the key variables that disturbed the recovery of domestic demand.
According to the data of the General Administration of Customs, in September, China's exports were 322.76 billion US dollars, up 5.7% year on year; Imports reached US $238.01 billion, up 0.3% year on year; The trade surplus was US $84.74 billion. In RMB terms, the export reached 2.19 trillion yuan, up 10.7% year on year; Imports reached 1.62 trillion yuan, up 5.2% year on year; The trade surplus was 573.57 billion yuan.
How to get to the exit in October
In terms of exports, the agency believes that external demand is weak, the base continues to rise, and the export growth rate may continue to fall in October. On the other hand, the decline of the certainty of external demand may become an important source of China's relative supply advantage.
For the year-on-year growth rate of China's exports in October, the forecast values of CICC Macro, Huatai Securities (13.270, - 0.19, - 1.41%) and Industrial Research Macro Research Department are 4.1%, 2% and 4% respectively in dollar terms. Calculated in RMB, the forecast value of Li Chao's macro team of Zheshang Securities (10.650, -0.14, -1.30%) is 10.3%.
In terms of base, the two-year composite growth rate of exports in September and October 2021 will be 18.3% and 18.6%, which will continue to rise slightly, or bring additional downward pressure to the year-on-year growth rate of exports in October.
From the perspective of external demand, CICC Macro said that in the context of the accelerated tightening of monetary policy by overseas central banks, the overseas PMI further declined in October.
Specifically, in October, the PMI of Markit manufacturing industry in the United States and the PMI of manufacturing industry in the euro area dropped to 49.9% and 46.6% respectively, both the lowest since June 2020.
From the high-frequency data, the average daily export of South Korea in the first 20 days of October 2022 decreased by 9% year on year (0.4% in September), and the average daily import from China increased by 7.1% year on year (8.6% in September); In October 2022, Vietnam's exports grew by 5% year-on-year (10% in September).
The Macro Research Department of Industrial Research said that, in combination with the port data, the foreign trade container throughput of the eight hub ports well tracked the year-on-year export volume of China, while the foreign trade container throughput of the ports in the first ten days of October fell to - 9.4% year-on-year, down 9.3 percentage points from the average in September, reflecting that the export volume in October will further decline year-on-year.
Li Chao's macro team said that the developed economies led by the United States and Europe have entered the stage of continuous substantial interest rate hikes. The economy is expected to stagflation. The price of bulk commodity assets is more sensitive to the decline of global total demand and has dropped significantly. The drag on China's exports caused by the pressure of external demand will be highlighted step by step in the medium term. Some categories such as electric vehicles and photovoltaic equipment that benefit from the European energy crisis have independent logic.
Li Chao's macro team said that since this year, under the influence of a series of overseas risk events and stagflation expectations, China's supply advantage has remained outstanding, but the increasing epidemic margin has had an impact on the overall efficiency of the domestic supply chain, which has impacted supply in stages and further dragged down exports. Both April and August showed that the domestic epidemic disturbance decreased in September and the effective protection of epidemic prevention policies such as normalization testing, and exports were repaired faster than in April.
Li Chao's macro team also said that the epidemic situation has become an important observation variable in the context of the certainty of falling external demand. At the same time, the logic of "China's supply advantage drives exports beyond expectations" will still be the key support for future export resilience.
Looking forward to the future, Li Chao's macro team said that under the background of multiple challenges and pressures of overseas supply, its sluggish performance may become an important source of China's relative supply advantage. A series of geopolitical conflicts, worker strikes, supply chain disruption, balance sheet deterioration and other shocks disturb overseas supply.
In terms of export structure, Li Chao's macro team expressed concern about high-tech manufacturing and labor-intensive industries. According to the industry data based on the export structure, China's exports of the two major categories in the first three quarters were outstanding, and mechanical and electrical products and labor-intensive products maintained positive growth.
Specifically, the rise of inflation expectations in overseas economies has improved the tolerance of price increases. China's supply advantage is reflected in the transfer of input prices (import prices) to output prices (export prices). The export boom of labor-intensive products and the high increase of export price index can confirm this; Against the background of a series of shocks to overseas supply, China's high-end manufacturing industry has improved its competitive advantage, which is conducive to improving the global market share. This is closely related to the rapid growth of China's high-tech manufacturing investment, especially in the two directions of independent and controllable chain supplement and basic industrial reconstruction (new energy and industrial intelligence).
On the effect of RMB devaluation, Li Chao's macro team said that this formed support for RMB denominated imports. In May, the effect of exchange rate depreciation boosted exports in stages, which to some extent boosted the growth rate of RMB denominated exports from May to July. Since August 10, the RMB exchange rate has started a new round of depreciation performance. By the end of October, the offshore RMB had already broken the 7.3 threshold in stages; Due to the time lag between the foreign trade exchange rate and the spot exchange rate, the trade exchange rate in September was only 6.8 (USD/RMB exchange rate), and the subsequent depreciation effect is expected to still have strong support for the import and export data in October.
According to Wande data, the average forecast of China's export year-on-year growth in October by 10 institutions recorded on the platform is 3.66%; The forecast range is from 2% to 9.6%, of which 8 institutions expect the year-on-year growth rate of exports to decline.
Import growth may slow down in October, and is expected to gradually recover in the future
In terms of imports, the agency believes that the epidemic situation and real estate are still the key variables that disturb the recovery of domestic demand. The fall in the price of imported bulk commodities in October may have a certain drag on the growth of imports.
For the year-on-year growth rate of China's imports in October, the forecast values of CICC Macro, Huatai Securities and Industrial Research Macro Research Department are 0.6%, - 4% and - 1.5%, respectively, in dollar terms. Calculated in RMB, the forecast value of Li Chao's macro team of Zheshang Securities is 8.2%.
The Macro Research Department of Industrial Research said that the domestic epidemic situation had repeatedly superimposed the price rise and fell back, and the year-on-year import reading in October fell. From the perspective of import quantity, the manufacturing PMI fell below the boom and bust line in October due to the disturbance of the epidemic situation, with a super seasonal decline. Among them, the import PMI fell 0.2 percentage points to 43.9% compared with the previous month. From this point of view, China's import demand slows down or drives down the import volume.
From the perspective of import prices, the Macro Research Department of Industrial Research said that the CRB spot index better tracked the year-on-year import prices of China. In October, the CRB spot index fell to - 1.1% year on year, and the year-on-year reading of import prices may further decline.
Huatai Securities also said that considering the price drop of major imported commodities, such as iron ore price index, the year-on-year growth rate in October was - 25%, expanding from the decline in September, which may bring some drag on the growth of imports.
However, some institutions believe that the import rate will gradually recover under the background of weak economic recovery.
Li Chao's macro team said that the epidemic situation and real estate were still the key variables affecting imports. Domestic demand determines the change of imports. In March and April, the epidemic situation disturbed the domestic demand. In July, the regular testing was conducted to deal with the real estate storm against the background of the epidemic situation, which also impacted domestic demand. In August, the epidemic situation in China was distributed in many places and frequently occurred in many places. The "ups and downs" of domestic demand repair determined that imports were characterized by low level shocks.
Looking forward to the future, Li Chao's macro team said that under the background of weak economic recovery, the import rate would gradually recover. The overall repair of the real estate industry still faces a series of challenges, and the downward pressure on the economy remains. In particular, considering that the real estate has a large impact on the overall economy (the industry chain is long, and has a large impact on the cyclical sectors of the previous cycle and the consumption of the subsequent cycle), the gradual repair of the real estate industry determines that the probability of weak economic recovery in the second half of the year is high. It is expected that the economic trend of the subsequent weak recovery determines the gradual recovery of the import probability.
According to Wande data, the average forecast of China's import year-on-year growth in October by eight institutions recorded on the platform is 0.11%; The forecast range is - 4% to 2%, and 4 institutions expect the year-on-year growth rate of imports to increase.
