China's exports fall 1.1% in Oct, hit by 25% drop in shipments to US

China's exports contracted in October, hit by a 25 per cent drop in shipments to the United States, the government reported Friday.

Persisting trade tensions with Washington may get a respite in the final quarter of the year after President Donald Trump and Chinese leader Xi Jinping agreed last week to de-escalate the trade war between the two largest economies. But trade friction still appears to be casting a pall on demand elsewhere.

Customs data show a 1.1 per cent drop in China's global exports in October compared to a year earlier, the weakest since February, following an 8.3 per cent increase in September.

 

Imports rose 1 per cent last month from the year before, compared with 7.4 per cent growth in September.

China's shipments to the US have already fallen by double-digits for seven consecutive months, while it has diversified its export markets to regions such as Southeast Asia and Africa.

The October decline also was affected by a high base for the same month in 2024, when exports growth soared more than 12.6 per cent, the fastest rate in over two years.

Imports rose 1 per cent last month, compared with a 7.4 per cent growth in September year-on-year. Economists said a prolonged property sector downturn and weak domestic consumption remains a concern.

At their meeting in South Korea in late October, Trump and Xi agreed to lower tariffs and postpone new port fees they had imposed on each other's vessels. China paused some of its export controls on rare earths for one year and agreed to purchase more soybeans and other farm products from the US. The US eased some sanctions on Chinese companies.

Goldman Sachs economists said following the Trump-Xi meeting that they expect Chinese export volumes to grow by 5 per cent-6 per cent annually, helping China to gain global market share and driving its overall economic expansion.

The reduction in some of these tariffs as part of the latest US-China trade deal' may provide a small boost to exports, Leah Fahy and Zichun Huang, China economists at Capital Economics, wrote in a recent note. But that won't show up until later in the last quarter of this year, they said.

A meaningful US export boost would probably start in the first quarter of next year and then accelerate in the second quarter, said Wei Li, head of Multi-Asset Investments at BNP Paribas Securities (China).

This week, Chinese Premier Li Qiang told business leaders at the annual China International Import Expo in Shanghai that China would embrace free markets and free trade, while he criticised trade restrictions that hurt developing countries.