China’s foreign trade showed surprising strength in September, with both exports and imports beating forecasts despite headwinds from mounting global tensions and weakening domestic demand.
However, with a surge in imports, trade balance shrank to a surplus of $90.45 billion, less than expectations of $98.96 billion. The surplus also fell from the $102.33 billion seen in the prior month, customs data showed on Monday.
Exports in dollar terms jumped 8.3% year-on-year, well ahead of the 6.0% gain projected by analysts and sharply up from August’s 4.4% rise.
Imports rose 7.4%, also far exceeding the anticipated 1.5% and reversing the modest 1.3% growth logged in August.
"This resilience shows that China has strengthened trade with the rest of the world amid US protectionism," ING analysts said in a note.
Exporters are increasingly shifting focus away from the United States toward Southeast Asia, Africa, and India to offset U.S. tariff pressure. Still, weakness lingers in domestic demand as fixed-asset investment, retail sales, and manufacturing orders remain sluggish.
"The September data was encouraging, but the overall trend remains uncertain. Moving forward, the fourth quarter should benefit from a relatively supportive base effect for imports," ING analysts wrote.
"But unless domestic demand recovers by more than expected, growth looks likely to moderate from September’s levels," they added.
Policymakers may view the stronger trade print as justification to delay aggressive stimulus measures, but further upside hinges on whether global demand holds up and whether trade tensions intensify
