China’s exports grew in November for first time in six months

China’s exports grew by 0.5% from a year earlier in November, expanding for the first time in six months, suggesting that Chinese factories are attracting buyers through discount pricing to overcome a prolonged slump in demand.

Imports, on the other hand, fell 0.6%, contrary to expectations for a 3.3% increase. This decline in imports adds to concerns about the state of domestic demand in China.

Mixed manufacturing data for November has led to calls for further policy support to shore up growth. While some data suggest improvements in conditions, negative sentiment-based surveys, such as the official purchasing managers’ index (PMI), continue to show challenges for Chinese manufacturers.

China’s official PMI from last week indicated that new export orders shrank for the ninth consecutive month. Factory owners are reportedly struggling to attract overseas buyers.

Export volumes reached a fresh high, supported by exporters reducing prices. However, economists express doubts about the sustainability of such conditions, as exporters may not be able to continue cutting prices for an extended period.

Despite challenges, quicker-than-expected growth in the third quarter and mostly upbeat data from October contribute to a less gloomy picture of China’s economic health. Analysts suggest that recent policy support measures have had some effect.

The International Monetary Fund (IMF) upgraded its China growth forecasts for 2023 and 2024 by 0.4%, however, Moody’s announced a downgrade warning on China’s A1 credit rating.

China’s recent export growth indicates potential improvements in external demand, possibly due to discount pricing. However, challenges in domestic demand persist, and uncertainties remain regarding the sustainability of the economic rebound. Ongoing policy support and global economic conditions will likely play crucial roles in shaping China’s economic trajectory.