China Boosts Exports, Cuts Commodity Imports in September, Widening Trade Surplus

If China is the chef in the kitchen making us all food, there’s reason to believe that the global economy might be getting less hungry in the near future. In other words, in September, the Chinese factories that anchor the world’s top manufacturer and top exporter bought less than expected of the raw materials they require to make industrial and consumer goods.

China’s imports in September rose only 17% to $239 billion while exports soared 28.1% to $305.7 billion. Analysts had expected both numbers to be around 20%. Significantly, China’s trade surplus with the U.S. increased to a record $42 billion, despite recent westward bottlenecks in supply chains and container shipping ports.

Driving the surplus was a drop in Chinese imports of essential commodities. The country’s buyers of raw materials cut their order in September. Shipments of iron ore dropped 11.8% to 95.6 million tons; copper declined 1.2% to 2.1 million tons; and oil shrank 15.3% to 41.1 million tons. Economists expect global demand to level off in the last quarter of 2021, after a sturdy recovery from the Covid-19 pandemic.

The situation with soybeans might worry the U.S. Chinese imports of soybeans fell 29.8% to 6.9 million tons. Buying more of the protein-rich crop from farmers in Kansas and Nebraska was a key bargaining chip China had agreed to in order to appease U.S. concerns about the trade deficit. The Biden administration is about to reengage with Beijing over securing better trade terms for its exporters.

One exception to this picture was coal imports, which rose 76.4% to 32.9 million tons. Although this signifies increased demand for electricity, and will be amplified as China reacts to shutdowns this month in its own mines because of flooding, it also should not be overinterpreted. China imports less than 10% of its coal consumption. However, the coal imports are part of a larger trend: China’s booming consumer market is going to need more power in the next decades, straining the world’s energy resources. In September, imports of natural gas rose 23.6% year-on-year to 10.6 million tons.

At the same time, China has shown remarkable resiliency in 2021 as the world’s most powerful exporter. The country’s outbound shipments increased 33% to $2.4 trillion in the first nine months of 2021. As customs spokesman Li Kuiwen put it, “there are both many favourable and unfavourable factors affecting the trade.”

There’s so much manufacturing within China that imports often aren’t necessary for Chinese buyers. And trade barriers still make it difficult for foreign industries to ship into China. As China builds up its high-tech and sophisticated machinery sectors, it’ll need to import less, too. Imports of motor vehicles in September declined 10.6% to $4.9 billion. Meanwhile, Chinese exports of motor vehicles almost doubled, increasing 93.2%, to $2.8 billion. However, overall high-tech imports did increase 10.4% to $77.5 billion.

It’s still China’s Asian trading partners who are winning the race to conquer Chinese import markets. Imports from ASEAN increased 17.4% to $36.2 billion, while exports rose 17.6% to $40.4 billion. By comparison, Chinese imports from the U.S. rose 16.6% to $15.4 billion, while exports to the U.S increased 30.8% to $57.4 billion. Chinese shipments to the European Union rose 29.4% to $44.5 billion while imports bumped up only 1.1% to $26 billion.