Hong Kong: China’s trade surplus exceeded USD 1 trillion for a second straight year, according to official data released Tuesday, as pressure mounts for greater balance in trade with Beijing.
Exports in October surged 35.2 per cent from a year earlier, the customs agency said. Exports have grown rapidly this year supported by high-tech goods like semiconductors and autos. Imports rose 41.6 per cent year-on-year.
Between January and October, China logged a USD 1.04 trillion trade surplus, even as the trade surplus narrowed last month to USD 105.3 billion from USD 133.5bn in September as imports picked up pace.
That puts China on track for surpassing last year’s record USD 1.2 trillion trade surplus.
“We expect Chinese exports to stay strong for the rest of this year, led by electronics and autos,” said Dave Chia, an economist at Moody’s Analytics.
Overcapacity in many industries, excess domestic savings and weakened domestic demand are still forcing China to ship its goods abroad as some countries move to protect their own industries, said Alicia Garcia-Herrero, chief economist for Asia Pacific at French bank Natixis.
The situation is not sustainable, she said.
Businesses are feeling the pressure of ferocious competition as China’s economy has slowed, said Cinders Zhou, who sells eyewear for a manufacturer in Linhai city in eastern China’s Zhejiang province.
“It comes down to product quality, or rather the increasingly the lack of it across the industry, since there’s significant homogenization,” said Zhou, whose company makes frames and lenses sold both in and outside China. “That has forced everyone to compete on price,” she said.
Trade curbs by the European Union pose an important risk at a time of heightened US trade barriers and tariffs, Chia said.
Top Chinese officials insist Beijing is not seeking to expand the trade surplus but wants more balanced global trade.
China’s exports could be vulnerable to setbacks for the artificial intelligence industry, a concern that deepened with the Democratic victories in the US midterm elections given the public backlash against expansion of data centers.
“If the AI boom slows or turns into a correction, lower chip and electronics prices and smaller shipping volumes would hit China’s exports hard,” Chia said.
Trade is among the top issues likely to be on the agenda in planned meetings between US President Donald Trump and Chinese leader Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation leaders summit later this month in China’s technology hub Shenzhen.
A two-month extension of a trade truce until January has provided some relief to exporters, though it’s unclear how long that may last.
US and European trade policies have added “a lot of difficulties” for Chinese businesses to expand in the markets, said Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, an industry group.
Strong exports have helped offset sluggish domestic demand in China, where the economy is forecast to meet Beijing’s official target of a 4.5 per cent to 5 per cent annual growth this year, slightly slower than last year’s 5 per cent expansion.
