Wang Han et al.: Exports remained resilient in October, and the base of production-based external demand will continue to be supported

Zhongxin Jingwei November 8 Title: "Wang Han et al.: Exports remained resilient in October, and the foundation of production-based external demand will continue to be supported"

　　Author Wang Han (Managing Director and Chief Economist of Industrial Securities) Jia Xiaojun (Senior Macroeconomic Analyst of Industrial Securities) Wang Xiaoxiao (Macroeconomic Analyst of Industrial Securities)

　　According to the General Administration of Customs, in October 2021, China's exports (in US dollars) increased by 27.1% year-on-year, 28.1% lower than the previous value; imports (in US dollars) increased by 20.6% year-on-year, higher than the previous value of 17.6%; and the trade surplus widened from the previous value of US$66.76 billion to US$84.54 billion. Our comments on this are as follows:

　　Exports: Export growth remained resilient in October, and the overseas recovery pull was the basic disk, while the price increase support continued

　　Exports in October 2021 continued to exceed market expectations. Why, under the influence of the high export base in the second half of 2020, exports have continued to show strong resilience since the second half of 2021? There are three main reasons:

　　First, the impact of price increases. Since June 2021, the contribution of price factors to exports has gradually risen. According to the statistics of Industrial Securities, the contribution of price factors to the growth rate of exports in October was 82.66%, although it was lower than the level of 90.71% in September, but it was still at a high level. From the perspective of the export volume price index, it also reflects the characteristics of the downward trend of the quantity index and the upward trend of the price index. The current exports are clearly supported by prices.

　　Second, the pull of overseas production recovery. Since 2021, production in the United States and Europe has continued to recover, driving the export resilience of China's production products (mechanical and electrical, high-tech) products, and becoming an important support for exports.

　　Third, the importance of China in the global supply chain and trade chain. Since the outbreak of the epidemic, in the process of production recovery, the United States and Europe have continued to demand for China's mechanical and electrical and high-tech products, reflecting that China has become an important part of the global supply chain and trade chain, which is also the basic plate of China's exports.

　　Imports: Imports strengthened slightly in October, and the expansion of energy imports was the main influencing factor

　　In October, the growth rate of imports rose slightly year-on-year. According to the statistics of Industrial Securities, from the perspective of the year-on-year contribution of commodity import volume and price, the quantitative contribution continues to be negative, and has been in the negative range for 6 consecutive months; the price contribution continues to decline compared with September, but the decline is smaller than that in September. From the perspective of subdivided commodity imports, the more obvious change in October is the import of energy products, and the trend of rising coal imports and prices has intensified, indicating that the domestic is hedging coal supply constraints by expanding imports; the downward trend of crude oil imports has expanded, or it is mainly affected by the rise in crude oil prices.

　　In addition, the changes that need to be paid attention to in October are that in addition to the expansion of coal imports, the year-on-year decline in imports of copper, steel and crude oil has eased compared with September, and the pressure on commodity imports has not continued to deteriorate.

　　Outlook: In the process of global supply chain recovery, production exports are the basic disk, and the price increase factor is an additional variable

　　Since 2021, after the surge of exports after experiencing the epidemic into the decline stage, we have found through the tracking of the recovery process of the global supply chain and the dynamics of China's exports that the logic of China's foreign demand has changed from "overseas epidemic prevention" to "US fiscal stimulus" to "global supply chain recovery", and also continues to emphasize the recovery of the global industrial chain or will drive the recovery of global trade, considering that China's participation in the global industry and trade chain has been deep, and China's exports have the basic support of production-based external demand. This logic will continue to be the basic support for China's export resilience.

　　In this context, another factor to pay attention to is that the current United States and Europe are facing the constraints of supply chain problems, which will cause price increases and bring inflationary pressures, and in the context of the basic support of Overseas Production Demand for China's exports, price increases may become additional factors affecting China's export readings, which requires special attention. (Zhongxin Jingwei app)

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