China trade surplus shrinks as exports fall more than expected

China’s trade surplus unexpectedly shrank in September as exports plunged more than anticipated.

The trade surplus came to $41.99bn last month, down from $52.05bn in August and compared to forecasts of $53bn.

Exports in dollar terms fell 10% year-on-year in September, far more than the 3.3% decline expected, following a 2.8% dip the previous month. Imports slid 1.9% in September, below estimates for a 0.7% increase and after a 1.5% rise in August.

In yuan terms, exports dropped 5.6% and imports increased 2.2%, compared to forecasts for gains of 2.5% and 5.5% respectively. The trade surplus in yuan was 278.4bn, shrinking from the previous month’s 346bn yuan. Analysts had predicted a surplus of 364.5bn yuan.

“The continued underwhelming performance of Chinese exports adds weight to our view that the People’s Bank will maintain its recent policy of gradual trade-weighted renminbi depreciation in coming quarters,” said Julian Evans-Pritchard, China economist at Capital Economics.

The analyst added: “Overall, today’s data are a reminder that China faces a challenging external environment which is likely to keep export growth subdued in coming quarters.”

On imports, he still sees some upside to growth in coming months unless there is evidence of a renewed slowdown in broader economic data: “At the very least, the sharp drop in global commodity prices at the end of last year should provide a more flattering base for comparison.”