Exports to the United States dropped by 8.2 per cent, year on year, marking the fifteenth consecutive month of contractions, while exports to the European Union dropped further to minus 12.6 per cent year on year, said HSBC Greater China economist Erin Xin.

“Exports show external demand remains soft. The weakness by countries was still broad-based, and exports to the US and EU, where more end-demand stems from, remained in the doldrums despite a weak base,” she said.

Most sales of consumer products including laptops, furniture and clothing were still deeply in contraction, she added, but there were some “bright spots” in the exports of transport items and certain electronics, including mobile phones and LCD displays.

2. Pickup in import growth a ‘positive surprise’

China’s imports grew by 3 per cent last month to US$218.3 billion, up from a 6.2 per cent decline in September and exceeding expectations from Wind for a drop of 4.7 per cent.

“Import volumes surged to a record high, and should remain strong in the near-term as fiscal support boosts commodity demand,” said analysts at Capital Economics.

China’s exports continue slide, adding to economic woes, but imports surprise

After accounting for seasonality and changes in import prices, Capital Economics said that import volumes rose by 7.5 per cent in month on month terms, finally surpassing their previous peak from 2021.

They said the improvement last month appeared to have been broad-based, with increases in inbound shipments of energy, metals and semiconductors.

“China has to rely more on domestic demand to boost growth. The pickup of import growth is a positive surprise. It is not clear whether this rebound of imports indicates the domestic demand has improved,” Zhang added.

3. Surplus narrows

Higher imports saw China’s overall trade surplus narrow to US$56.5 billion in October, down from US$77.71 billion in September.

“The sharp decline in the trade surplus may increase the pressure on China’s balance of payments, which is already threatened by sustained capital outflows and the dearth of inbound travellers. Beijing may need to take bolder steps to restore consumer and investor confidence,” said analysts at Japanese bank Nomura.

4. Support still needed amid weak global demand, property sector

Capital Economics expect exports to decline over the coming months before bottoming around the middle of next year.

“Measures of foreign orders hint at a more significant drop in foreign demand than what has so far been observed in the customs data. And we expect most advanced economies to experience either mild recessions or weak [gross domestic product] growth in the near-term, which will weigh on their demand for foreign goods,” they said.

Imports, though, are likely to rise more slowly going forward, said Capital Economics, with a step up in infrastructure spending set to support demand for metals and keep imports on an upwards trend.

Xin at HSBC expects policymakers to stay accommodative through both monetary and fiscal measures to help solidify the recovery path, including cuts to the reserve requirement ratio, as well as issuance of government bonds to support infrastructure activity.

“While the trade data shows an improvement in domestic demand, policymakers will still need to stay supportive for growth given ongoing headwinds from still weak global demand and the property sector,” she said.