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China's surprisingly robust September import data was driven partly by panic buying of chips containing U.S. technology and increased purchases under the two countries' trade deal, so may not be sustainable in months ahead, particularly given uncertainties about the Covid-19 pandemic and the U.S. presidential election, policy advisors told MNI.

While the strong yuan and infrastructure investment also played a part in boosting imports, the increased purchases of U.S. agricultural products and Washington's move to ban chip exports to China were key factors, said Shen Jianguang, a former visiting scholar at the People's Bank of China and now chief economist at JD Finance.

Imports of integrated circuits surged 27.2% y/y, accounting for a third of September's total 13.2% import growth, noted Shen, adding that the rush by companies to stockpile chips will peter out in coming months. Still, imports should gain more than 5% in Q4, Shen said, adding, like other advisors, that uncertainty over the U.S. elections and the global pandemic might cool their impetus. September's jump in imports compared to expectations of 0.3% in a Reuters poll.

Strong exports have also encouraged firms to increase purchases of raw materials and intermediary goods, noted Tang Jianwei, chief economist at Bank of Communications, one of the largest state-owned banks.


The 24.7% y/y jump in imports from the U.S. was driven primarily by agricultural products, especially soybeans.

"I think China and the U.S. still cherish the trade deal and want to keep the relationship on track by staying with the deal," said Zhang Jianping, a director from the Chinese Academy of International Trade and Economic Cooperation, adding that the strong yuan supported import demand.

China wants to buy more U.S. products than last year to show its commitment to the Phase One trade deal signed at the beginning of the year, although it is widely recognised that it cannot meet these targets given the effects of Covid-19 on its own and the world economies, said another policy advisor, asking to remain anonymous.

In the first nine months of the year, China bought CNY91.39 billion worth of agricultural products from the U.S., up 44.4% y/y, but short of the trade deal commitments, according to customs data.

Should Democrat Joe Biden win the presidential election, Beijing policy advisors expect he will keep the trade deal in place, as MNI has previously reported.

MNI London Bureau | +44 203-865-3829 |
MNI London Bureau | +44 203-865-3829 |

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