China's exports grow 5.9% in November despite 29% drop in US shipments

China's exports returned to growth in November following an unexpected contraction the month before, although shipments to the United States dropped nearly 29 per cent from a year earlier in an eighth straight month of double-digit declines.

Overall exports from China were 5.9 per cent higher than last year in November in dollar terms, customs data released on Monday showed, at $330.3 billion, better than economists' estimates. That was an improvement from a 1.1 per cent contraction in October.

While exports from China to the US have fallen for most of the year, shipments have surged to other destinations, including Southeast Asia, Africa and Latin America.

China's imports increased 1.9 per cent in November, better than October's 1 per cent growth, even though a persistent downturn in the property sector is still weighing on consumer spending and business investment.

A year-long trade truce between China and the US was reached at a meeting between US President Donald Trump and Chinese leader Xi Jinping in late October in South Korea. The US has lowered its tariffs on China, and China has promised to halt its export controls related to rare earths.

While the trade truce and the US's tariff reductions should be a positive for Chinese exports, we are now entering a period of unfavorable base effects, ING Bank economists Lynn Song and Deepali Bhargava wrote in a report, referring to strong growth in exports ahead of US President Donald Trump's big tariff hikes after he returned to the White House. This should keep trade growth modest.

Last month, China's factory activity contracted for an eighth straight month according to an official survey, as economists said it was still early to determine whether there was a real rebound in external demand following the US-China trade truce.

With exports still going strong, economists generally expect China to more or less meet its economic growth target of around 5 per cent for this year.

Chinese leaders had outlined a focus on advanced manufacturing for the next five years following a high-level meeting in October. An annual economic planning meeting this month is expected to shed light on details of those plans.

A stable global trade environment is not likely to last long, said Chi Lo, Global Market Strategist, BNP Paribas Asset Management, as China-US relations remain in a stalemate despite their temporary trade truce.

Still, some economists believe that China will continue to gain export market share in coming years.

Morgan Stanley predicts by 2030, China's market share in global exports will reach 16.5 per cent, up from about 15 per cent currently, fueled by its edge in advanced manufacturing and high-growth sectors such as electric vehicles, robotics and batteries.

Despite persistent trade tensions, continued protectionism, and G20 economies taking up active industrial policies, we believe China will gain more share in the global goods export market, Morgan Stanley Chief Asia Economist Chetan Ahya said in a recent note.