Mixed manufacturing data for November has kept
alive calls for further policy support to shore up growth but also raised
questions about whether predominantly negative sentiment-based surveys have
masked improvements in conditions.
Exports grew 0.5% from a year earlier in November, customs
data showed on Thursday, as compared to a 6.4% fall in October. Imports fell
0.6%, dashing forecasts for a 3.3% increase and swinging from a 3.0% jump last
month.
"The improvement in exports is broadly in line with
market expectations... sequential growth in China's exports in the past few
months has strengthened," said Zhiwei Zhang, chief economist at Pinpoint
Asset Management. "There are green shoots in other Asian countries' export
data as well in recent months."
The Baltic Dry Index, a bellwether gauge of global trade,
climbed to a three year high in November, supported by improved demand for
industrial commodities, particularly from China.
South Korean exports, another gauge of the health of global
trade, rose for a second monthin November, buoyed by chip exports, which
snapped 15 months of declines.
Trade with China's major peers also painted a rosy picture,
with exports to United States, Japan, South Korea and Taiwan all up on October.
China's official
purchasing managers' index (PMI) last week showed new export orders shrank for
a ninth consecutive month, while a private sector survey highlighted the
struggles of factory owners to attract overseas buyers for a fifth month.
"While the level of export volumes hit a fresh high,
(they were) supported by exporters reducing prices," noted Zichun Huang,
China economist at Capital Economics.
"We doubt this robustness will persist," Huang
cautioned, "as exporters won't be able to continue cutting prices for much
longer."
Factory gate prices in the official PMI contracted for a
second month in November, while input costs expanded for a fifth straight
month.
Still, some analysts point to quicker-than-expected growth
in the third quarter and a run of mostly upbeat data from October to
argue that recent hard data paints a less gloomy picture of the economic health
of the Asian giant than the sentiment-based surveys. The hard data also suggest
the support measures trickling out of Beijing since June have had
some effect, they say.
"The data shows overseas demand is stronger than we
thought and domestic demand is weaker than we thought," said Dan Wang,
chief economist at Hang Seng Bank China. "The biggest export items are
still electrical machinery and cars, so demand in Europe and Russia will have
bolstered outbound shipments."
Analysts say it is too early to tell whether the recent
policy support will be enough to shore up domestic demand and how sustainable
any uptick in overseas demand is, with property, unemployment and weak
household and business confidence threatening a sustainable rebound at home.
The International Monetary Fund in November upgraded
its China growth forecasts for 2023 and 2024 by 0.4% percentage
points each, but that came from a lower base. And Moody's on Tuesday slapped
a downgrade warning on China's A1 credit rating.
The Chinese markets seemed to reflect that cautiousness,
with the yuan easing against the dollar after the data, while country's blue
chip CSI300 stock index fell 0.44% and Hong Kong's Hang's Hang Seng lost 1.46%.
China's crude oil imports in November fell 9.2%
year-on-year, the first annual decline since April as high inventory levels and
poor manufacturing activity took their toll on demand for products such as
diesel. But iron ore imports climbed slightly last month.
"While export demand improved, it is unclear if exports
can contribute as a growth pillar into next year," Pinpoint Asset
Management's Zhang warned.
"The European and United States economies are cooling.
China still needs to depend on domestic demand as the main driver for growth in
2024."
