MNI Data Analysis: China Exports, Imports Soften in Oct

--Exports Growth Below Expectations But Still Strong

--Imports Growth Beat Estimates Although At a Slower Pace

--Both Export, Import Growth Rates Boosted by Base Effect

     BEIJING (MNI) - Data released Friday by the General Administration of

Customs:

                   Balance (bln $)  Exports Y/Y %  Imports Y/Y %

----------------------------------------------------------------

October                       38.2            6.9           17.2

MNI Survey Median             38.9            7.1           16.1

Previous                      28.5            8.1           18.6

     FACTORS:

--China Oct. Seasonally Adj. Exports +1.9% m/m VS +4.4% Sept.

--China Oct. Seasonally Adj. Imports +11.2% m/m VS +11.9% Sept.

--China Oct. Seasonally Adj. Exports +8.2% y/y VS +5.9% Sept.

--CHINA Oct. Seasonally Adj. Imports +23.2% y/y VS +13.6% Sept.

     TAKEAWAY: Chinese exports and imports grew at slower paces in October, with

export growth slowing below expectations. 

     Both the import and export year-on-year growth rates were flattered by a

weak comparison bases in October last year, when exports fell 7.3% and imports

1.4%. 

     The slowdowns indicate that both domestic and overseas demand fell during

the last month. 

     According to the General Administration of Customs, October exports rose

6.9% year-on-year in U.S. dollar terms. The reading was below the 8.1% gain in

September and also lower than the MNI median forecast for a 7.1% rise. 

     The result was in line with the official manufacturing PMI sub-index of

exports orders in October. Export order index dropped to 50.1, the lowest level

this year.  

     Overseas demand was sluggish, with the year-on-year growth rates supported

by comparison with very weak export levels in October last year. Among China's

three biggest customers, export growth to the United States decelerated while

exports to the European Union and to Japan rising slightly.  

     Exports to the U.S. rose 8.1% year-on-year to $37.75 billion, down from

13.8% growth in September and the lowest growth rate since February, but still

significantly higher than the 5.6% decrease posted in October 2016. Exports to

the European Union grew 11.2% to $30.57 billion, the lowest export value since

April. The October growth rate in exports to the EU was  higher than the 10.5%

in September and well above the 8.6% decrease last October. 

     Exports to Japan rose 5.6% to $11.7 billion, the highest growth rate since

July and much higher than the 3.2% decrease last October.

     The yuan exchange rate rose 0.3% against the greenback in October, compared

with a 0.76% depreciation in September. 

     "The comparison level last year had some effect and falling export prices

played a negative role" in the recorded value of exports, Xie Yaxuan, chief

economist with China Merchants Securities, told MNI.

     Imports increased 17.2% year-on-year in October, higher than the MNI median

forecast for a 16.1% gain but down from the 18.6% rise in September.

     "The slowdown in domestic investment, robust material imports in September

and the lower prices of commodities mainly contributed the softer (import)

performance," Xie said. 

     Due to the impact of the government's environmental protection campaign and

week-long National Day holiday at the beginning of the month, commodity imports

plunged in October. 

     Imports of iron ore decreased 22.7% month-on-month in October, with China

importing 79.49 million tons, the lowest since February 2016. Coal imports

declined 21.4% m/m to 21.28 million tons. 

     The performance of imports was also in line with the latest official CFLP

manufacturing PMI, with the import sub-index falling to 50.3, the first drop

below the 51 level in five months. 

     The import growth rate continued to outpace the export growth rate in

October, the 15th consecutive month it has done so, but absolute exports

exceeded imports, resulting in a $38.2 billion trade surplus. The surplus was

slightly lower that the MNI survey median forecast of $38.9 billion, but much

higher than September's $28.5 billion surplus. 

     In the first ten months of this year, the trade surplus amounted to $334.77

billion, below the $426.99 billion surplus in the same period last year, with

exports rising 7.4% y/y and imports up 17.2% y/y so far this year.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

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