Chinese exports rose in November for the first time in seven months, officials said Thursday, as the country navigates a troubled recovery from the Covid-19 pandemic.

However, the reading compares with a low base from last year when authorities were still wedded to a zero-Covid policy that hammered output and business activity, while a surprise drop in imports highlighted weak consumer activity at home.

Overseas shipments edged up 0.5 percent on-year to $291 billion, the General Administration of Customs (GAC) said, marking their first increase since April.

The figure was much better than analysts' forecasts and followed a 6.4 percent slump in October.

"The improvement in exports is broadly in line with market expectation," said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.

But while exports were now seeing "sequential growth", he added that "it is unclear if (they) can contribute as a growth pillar into next year".

"The European and US economies are cooling. China still needs to depend on domestic demand as the main driver for growth in 2024," he told AFP in a note.

Chinese exports — long a key growth driver — have largely been in decline since last October except for a short-lived rebound in March and April.

Shipments to the United States plummeted nearly 14 percent last month while those to the European Union plunged 11 percent.

But exports to Russia jumped more than 50 percent, underscoring Beijing's economic rapprochement with its staunch ally despite its invasion of Ukraine.

Imports painted a bleaker picture, sliding 0.6 percent to $224 billion in November and marking a return to contraction.

They had seen a surprise jump in October, bucking a forecast sharp drop and marking the first month of year-on-year growth since late last year.

It was hoped the rise could be a signal that consumer sentiment was recovering.

– Uncertain recovery –

"Domestic demand is not really improving, even as we compared it to a low base last year," Woei Chen Ho, an economist at United Overseas Bank, told Bloomberg News.

"There is also no discernible improvement trend in exports despite a slightly better than expected export growth," she added."Taken together, it suggests a weak recovery trend in China."

The world's second-largest economy expanded a moderate 4.9 percent in the third quarter, slightly less than Beijing's five percent target, which is one of the lowest in years.

Officials have struggled to sustain a recovery from the impact of the pandemic, even after removing draconian containment measures at the end of 2022.

Exports have been hit by weak global demand, while a debt-fuelled property crisis and low consumption have caused headaches at home.

Consumer prices shrank 0.2 percent in October, marking a return to deflation following a modest rebound from the summer.

Meanwhile, some of the nation's biggest real estate developers owe hundreds of billions of dollars and are teetering on the brink of bankruptcy.

On Tuesday, Moody's downgraded the outlook on China's credit rating to "negative" from "stable", citing the country's rising debt.

The ratings agency said the decision reflected growing evidence that Beijing will prop up financially stressed local governments and state-owned enterprises.

This, it added, was "posing broad downside risks to China's fiscal, economic and institutional strength".

Ting Lu, chief China economist at Japanese bank Nomura, said Thursday that property woes remained "the single largest drag affecting China's economy".

"Despite the multitude of stimulus measures announced recently, we believe it is still too early to call the bottom," he said in a note.

Asia tracks Wall St sell-off as US labour market softens
Hong Kong (AFP) Dec 7, 2023 –

Asian stocks sank Thursday, extending a rollercoaster week across world markets as investors jockey for position ahead of key US jobs data, while oil struggled to bounce back after hitting a five-month low.

After a November rally built on optimism that the Federal Reserve will cut interest rates next year, this month has seen those positions unwinding on concerns the buying may have been overdone.

Data on Thursday from payrolls firm ADP showing a smaller-than-forecast rise in private sector jobs reinforced views that the labour market and economy were slowing as inflation comes down. Figures released Tuesday showed job openings were also falling.

That has fuelled bets on the Fed slashing borrowing costs, with some saying as early as the first quarter — even as bank officials say they are keeping the option of another hike on the table.

Decision-makers hold their next policy meeting next week, and that will be pored over for clues about their plans for 2024.

The sharp slowdown in jobs creation, however, is causing some concern.

"The slowdown in hiring continues and is becoming more obvious," said Peter Boockvar, author of the Boock Report.

"What I'm mostly focused on right now is the trajectory of activity – and all I see is slowing in multiple places, including now the labour market."

And SPI Asset Management's Stephen Innes said: "The US labour market is showing signs of contracting much faster than expected.

"This is not necessarily a 'risk-on' panacea, especially if the downward momentum in the jobs markets picks up a good head of steam."

All three main indexes on Wall Street ended in the red, and Innes added that the pullback from November may be down to a fear that rate cut expectations might have been overdone.

Traders are pricing more than one percentage point of cuts next year, he said.

"While the growth outlook has moderated in recent weeks… the economy does not appear to be heading for a recession in 2024, which — despite progress on inflation — might not compel the Fed to cut as aggressively as the current market pricing might suggest," he warned.

He said any hawkish turn from the Fed or a data shock could spark a heavy sell-off in markets.

With all eyes on Friday's crucial non-farm payrolls figures, Asian traders were taking cash off the table Thursday.

Hong Kong and Tokyo fell more than one percent each, while Shanghai, Sydney, Seoul, Singapore, Taipei, Wellington, Jakarta and Manila were also in the red.

Oil prices edged up in early business, though they made little headway into the near four percent losses seen Wednesday that put WTI below $70 for the first time since July.

Data pointing to a jump in US stockpiles compounded demand worries as economies slow, while traders remain sceptical that Saudi Arabia and its allies will stick to recently pledged deep output cuts.

Analysts have begun to consider the possibility that Riyadh could abruptly reopen the taps to maintain market share, similar to a move in 2014 to counter rising US production.