Via Capital Economics:
• Exports continued to defy US tariffs last month but imports softened in the face of cooling domestic demand. We expect both to weaken in the coming quarters as economic growth slows in China and among its major trading partners.
• Export growth accelerated in September, from 9.8% y/y to 14.5% in US dollar terms. Most had anticipated a slight decline (the Bloomberg median was 8.2%, our forecast was 8.0%). Growth in exports to the US edged up but by less than shipments to the rest of the world, hinting at some marginal impact from tariffs. (See Chart 1.) But the big picture is the Chinese exports have so far held up well in the face of escalating trade tensions and cooling global growth, most likely thanks to the competitiveness boost provided by currency depreciation. However, the People’s Bank will need to let the renminbi weaken further or else this prop to exports will fizzle out before long. (See Chart 2.)
