China’s trade data for November revealed unexpected headwinds, with imports plunging 3.9%, the steepest drop since September 2023. This sharp decline comes against market expectations of a modest 0.3% growth, raising concerns about domestic demand in the world’s second-largest economy.
Meanwhile, exports grew by 6.7% year-on-year in U.S. dollar terms, falling short of the 8.5% forecast and marking a slowdown from the previous month’s 12.7% growth.
Trade Partners and Sector-Specific Insights
China’s trade with major partners showed mixed results:
- Exports to ASEAN countries surged by nearly 15%, while imports fell 3%.
- Trade with the U.S. saw exports rise 8%, but imports dropped over 11%.
- Exports to the European Union increased 7.2%, while imports contracted by 6.5%.
In the resource sector, rare earth exports rose nearly 5% to 4,416 metric tons in November, while imports of the minerals dropped by over 20%. Notably, steel exports surged 16%, continuing a trend that could see annual steel exports cross the 100 million metric ton mark, a level not seen since 2016.
Macroeconomic Implications and Short-Term Outlook
The decline in imports reflects soft domestic consumption and a continued slowdown in the housing market, while exports remain a relative bright spot. Analysts predict a short-term recovery in trade volumes, fueled by front-loading of U.S. orders ahead of potential tariff impacts next year.
China’s leadership has pledged strong fiscal and monetary stimulus to counter these challenges, promising “unconventional counter-cyclical adjustments” to stimulate growth and boost domestic consumption.
“The tariff threats may not impact export volumes until mid-2025,” said Zichun Huang, China economist at Capital Economics, adding that U.S. firms could increase orders in the short term.
Economic Indicators Show Mixed Signals
Manufacturing activity expanded for the second consecutive month in November, with the official PMI rising to 50.3, indicating slight growth. However, consumer inflation fell to a five-month low of 0.2% year-on-year, further signaling weak domestic demand.
Year-to-date trade data highlights the uneven recovery:
- Exports rose 5.4% to $3.24 trillion.
- Imports increased 1.2% to $2.36 trillion.
“The trade outlook remains uncertain as external demand weakens and domestic consumption struggles to rebound,” said Erica Tay, director of macro research at Maybank, who expects a fall-off in export growth in the second half of 2025 as U.S. tariffs take effect.
