China's trade surplus climbed to $97.4 billion in November, its largest in five months, despite slowing export growth and a steeper-than-expected decline in imports. The latest trade figures reflect challenges in sustaining momentum for the world's second-largest economy amid weak domestic demand and ongoing global trade tensions.
Customs data released on Tuesday showed that exports grew 6.7% year-over-year, a notable slowdown from October's 12.7% increase and below analysts' forecasts of 8.5% growth. Imports fell by 3.9%, marking the second consecutive month of decline and the sharpest drop in nine months.
The larger trade surplus underscores a combination of slowing international demand for Chinese goods and subdued domestic purchasing power. Analysts attribute the export deceleration to manufacturers rushing orders ahead of potential U.S. tariff hikes under President Donald Trump's administration.
Zichun Huang, an economist at Capital Economics, noted that the trade figures, while concerning, might not signal a long-term slowdown. "We expect exports to accelerate again in the coming months, supported by gains in export competitiveness and exporters front-running tariffs," Huang said in a note. She added that import volumes could recover as fiscal spending boosts industrial demand.
China's exports to the United States rose 8% in November compared to the same month last year, while shipments to the European Union grew by 7.2%. However, exports to Russia fell by 2.6%, reversing a 27% increase in October. Analysts believe the decline reflects the impact of U.S. secondary sanctions on goods perceived to support Russia's military operations.
The decline in imports highlights persistent weaknesses in China's domestic economy, with businesses and consumers scaling back purchases. November's consumer inflation data added to the picture of sluggish demand, showing a mere 0.2% increase, down from 0.3% in October, largely due to lower food prices.
The trade figures follow a pledge by China's Politburo to implement more proactive fiscal policies and moderately loosen monetary measures in 2025. The announcement, which came Monday evening, signaled Beijing's intent to stimulate economic growth and expand domestic demand.
China's factory activity, however, provided a glimmer of hope. An official survey from the National Bureau of Statistics last month showed that manufacturing orders expanded for the second consecutive month in November, with the purchasing managers' index (PMI) rising to 50.3. This figure, the highest in seven months, suggests that some sectors of the economy are stabilizing.
Stock markets responded positively to Beijing's policy announcement, with the Shanghai Composite and Shenzhen Component indexes each gaining over 1%. The offshore yuan strengthened to 7.25 against the U.S. dollar, reflecting investor optimism about potential stimulus measures.
Attention now turns to China's Central Economic Work Conference this week, where policymakers are expected to outline economic priorities and provide guidance on a comprehensive 2025 stimulus package. The conference will likely address strategies to counter external pressures and revive consumer confidence.
