China's trade surplus widens as imports drop

China's trade balance widened substantially more than expected in November as exports unexpectedly rose and imports registered a surprise decline.

The trade balance stood at $68.4bn last month, up from $56.5bn in October and well above the consensus forecast of $58.1bn.

Exports were up 0.5% year-on-year in November after a 6.4% annual drop the month before; analysts had expected a decline of 0.8%.

Meanwhile, imports fell 0.6% after rising 3% previously, surprising analysts who had expected another 3% increase.

"China’s exports appear to have bottomed out, but the outlook is only for a weak recovery going into 2024, given the likely prospect of soft global demand," said Duncan Wrigley, chief China+ economist at Pantheon Macroeconomics.

Wrigley pointed out that exports have been "moving sideways" for the past quarter in three-month moving average terms, and remain well below the surge seen in March which came on the back of a catch-up following "disruptions as China exited zero-Covid policy over the turn of the year".

"Both the Caixin and the official PMIs indicate falling new export orders. Multinationals are partly shifting supply chains away from China, under political pressure from the U.S. in particular. But China’s vast industrial base ensures cost and other competitive advantages in electric vehicles, solar panels and electronic products which will be hard to match in the near term."