It is important not to fall into the China stats trap.
Reams of figures are rolled out about the state of the world’s second-largest economy.
But it pays to read between the lines.
Earlier this week, the General Administration of Customs reported upbeat trade data for September.
The numbers were also strong in a separate report showing car sales in China continued to cruise along.
So, what were the trade figures?
Exports jumped by 9.9% last month compared to the same period in 2019. The numbers were broadly in line with analysts’ expectations and up from the 9.5% increase in August.
Imports were even stronger after being stuck in the doldrums for most of the year.
The September increase of 13.2% stood in stark contrast to the 2.1% decline in August, reaffirming forecasts that domestic demand is starting to pick up.
What was the reaction to the data dump?
In a word, mixed.
Many analysts pointed out that Chinese exporters are making a brisk recovery from the Covid-19 pandemic.
They highlight how companies are rushing to grab market share as overseas rivals grapple with shrinking manufacturing capacity amid a second coronavirus wave.
“The big picture is that outbound shipments remain strong with easing demand for Covid-19 related goods, such as face masks, being mostly offset by a recovery in broader demand for Chinese-made consumer goods,” Julian Evans-Pritchard, the senior China economists at Capital Economics, said.
“A jump in imports suggests that domestic investment spending remains strong,” he added as reported by the Reuters news agency.
That does seem positive compared to China’s major trading partners?
At first glance, yes. But others are not so sure. Medical supplies such as face masks made up to one trillion yuan, or US$150 billion, in exports during the three months that ended in September, the General Administration of Customs reported.
“China has successfully filled the global supply shortage,” Li, a Customs spokesman, told a news briefing.
Still, that pace of “growth” looks certain to slow as demand for Chinese-made products recede.
“Export growth looks to be on shaky foundations. Moreover, broad demand for Chinese goods doesn’t look robust given the resurgence of Covid-19 in key markets,” Trivium China, a research and advisory group, said.
How did all this affect China’s trade surplus with the rest of the world?
Well, the rise in imports pushed the surplus for September down to $37 billion, compared with $58.93 billion in August. It was also lower than an expected $58 billion.
The surplus with the United States also narrowed to $30.75 billion last month from $34.24 billion in August. But that fell short of the Phase I trade agreement hammered out between Beijing and Washington at the start of the year.
What about those auto sales?
Oh, yes. They surged 12.8% in September compared to the same period in 2019 but are still down 6.9% in the first nine months year-on-year.
Sales hit 2.57 million vehicles, data from the China Association of Automobile Manufacturers showed.
Even so, these are the peaks months for people buying new vehicles with the period known as “Golden September, Silver October.”
New energy vehicle sales, which include plug-ins, petrol-electric hybrids and hydrogen fuel-cell models, surged by 67.7% to 138,000 units with the help of a government-backed campaign.
“Based on our dealer channel checks, the growth in momentum extended into the October Golden Week, as retail sales exceeded dealers’ expectations,” Shi Ji, an analyst at Haitong International, said as reported by Reuters.
But the big question remains, will sales numbers slow down in the months ahead?