China beats market expectations

Export grew by 11.6% yoy in October, up from 9.9% in September.

OCBC Treasury Research noted:

All Chinese October growth data beat market expectations. Industrial production grew by 9.6% yoy, up from 9.2% yoy in September. Retail sales and fixed investment increased by 14.5% and 20.7% yoy respectively in October, up from 14.2% and 20.5%.

China’s October export surprised market on the upside despite weak export figure reported by Taiwan for the same period. China’s export grew by 11.6% yoy in October, up from 9.9% in September.

The stronger than expected export data was mainly supported by stronger demand from ASEAN. Exports to ASEAN surged by 45% yoy, up from 25% yoy in September while exports to EU remained weak contracting by 8.1% yoy.

We think the recovery of Chinese export may not be sustainable given the demand from G3 economies remain weak. As such, we may see export growth to slow in the coming months.

China’s imports grew by 2.4% yoy in October, no change from September, slightly weaker than consensus. As such, China’s trade surplus widened further to US$31.99bn from US$27.67bn in September.

The October data confirmed out view that Chinese economy has bottomed out in Q3. The economy is likely to expand faster in the last quarter of this year.