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China's trade slump likely eased further in October: Reuters poll

BEIJING: China’s exports likely fell more slowly for a third consecutive month in October, a Reuters poll showed, adding to signs that the economy is stabilising even if the trade performance remains weaker than it was before Beijing removed anti-COVID curbs.

Exports are expected to show a 3.3 per cent fall in October from a year earlier, following a 6.2 per cent drop in September, according to the median forecast of 34 economists polled.

Recent economic indicators suggest the policy support measures introduced since June to shore up economic growth are beginning to take effect, although China’s manufacturing activity unexpectedly contracted again last month.

Policymakers are contending with a domestic property crisis, high youth unemployment, depressed private sector confidence, a slowdown in global growth and Sino-US tensions over trade technology and geopolitics.

As a result, analysts anticipate policymakers will have to introduce further stimulus measures to ensure the economy hits Beijing’s annual growth target of around 5 per cent, not least because trade remains weaker than during the pandemic when the government deployed strict curbs on the movement of people and goods. Those curbs were finally removed in December 2022.

Economists at BNP Paribas projected that exports fell by just 1 per cent last month, while Barclays returned the most pessimistic forecast that outbound shipments fell by 5.5 per cent in October compared with the same period a year earlier.

Both new export and import orders shrank for an eighth consecutive month in October, a sub-index in the official purchasing managers’ index survey showed, suggesting that manufacturers are still struggling for buyers overseas and ordering fewer components used in finished goods for re-export.

Global trade activities, represented by the Baltic Dry Index, reported falling demand in October as it dropped to its lowest rate since December 2020, owing to congestion in North American and European ports.

But South Korean exports to China, a leading indicator of China’s imports, fell at their slowest pace in 13 months in October, dropping 9.5 per cent compared with the same period last year.

China’s imports are expected to have shrunk by 4.8 per cent, after dropping 6.2 per cent in September, reflecting improving domestic demand.

The median estimate in the poll indicated that China’s trade surplus would increase, with analysts predicting it will come in at US$82.00 billion, compared with US$77.71 billion in September.

China’s trade data will be released on Tuesday.

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