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China’s exports beat forecasts amid precautions against Trump’s tariff threat

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China’s exports surged at their fastest pace in two years this October, as factories increased shipments to key markets to counter new tariffs from the United States and European Union and the looming risk of a two-front trade war.

The recent victory of Donald Trump, who has pledged to impose tariffs exceeding 60 percent on Chinese imports, is likely to lead to a buildup of stockpiles in China’s top export markets.

Trump’s tariff threat has unsettled Chinese factory owners and officials managing exports worth approximately $500 billion annually. Tensions are further strained by trade issues with the EU, which purchased $466 billion of Chinese goods last year.

While domestic confidence remains impacted by a persistent property market debt crisis, export momentum offers a bright spot for China’s struggling economy.

Exports from the world’s second-largest economy rose by 12.7 percent year-on-year last month, surpassing a 5.2 percent increase forecasted by Reuters economists and a 2.4 percent rise in September. However, imports fell by 2.3 percent, against predictions of a 1.5 percent decline, marking the first negative import growth in four months.

China’s trade surplus climbed to $95.27 billion in October, up from $81.71 billion in September.

“We anticipate a wave of front-loading into Q4 before pressure mounts in 2025,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “This is largely due to Trump’s tariff threat, which is becoming increasingly realistic.”

The ‘Trump effect’ on exports

China’s exports to the U.S. increased 8.1 percent year-on-year in October, while shipments to Europe rose by 12.7 percent over the same period.

“We expect exports to remain strong in the coming months,” said Zichun Huang, China economist at Capital Economics, in a note. He added that the impact of Trump’s tariffs may not materialize until late next year.

Huang noted that Trump’s return could prompt U.S. importers to step up purchases to bypass potential tariffs, offering a short-term boost to Chinese exports.

China’s top exports to the U.S. last year included smartphones, tablet computers, and video game consoles. Similar to Trump’s initial term, Chinese electronics makers may once again be a target.

Yet, signals indicate waning demand for these goods. Trade data from South Korea and Taiwan points to slowing global demand, and German producers report declining interest from overseas buyers, suggesting that Chinese producers may be cutting prices or moving inventory out of China to attract buyers.

An official survey of factory activity in October showed Chinese factories struggling to secure overseas buyers.

“If the PMI new export sub-index is dropping while the export numbers are rising, it’s clear this is an inventory adjustment,” said Dan Wang, a Shanghai-based Chinese economist.

Rising rtocks and weak yuan boost exports

Chinese and Hong Kong stocks rose on Thursday, buoyed by investor optimism over potential stimulus measures, while the yuan rebounded from a three-month low against the dollar. Analysts note that the weak yuan may have fueled export growth, though it simultaneously raised import costs.

China’s imports from the European Union and Southeast Asia fell by 6.1 percent and 7.3 percent year-on-year last month, while Japanese imports continued to rise. Notably, crude oil purchases—from the world’s largest oil importer—dropped by 9 percent, marking the sixth consecutive month of decline on an annual basis.

Zhou Maohua, a macroeconomic researcher at China Everbright Bank, attributed the decline in import growth to weak domestic demand and low import prices.

Conversely, China’s soybean imports surged last month, as U.S. grain exporters raced to meet demand in China ahead of the U.S. election.

Economists warn against over-reliance on exports

Amid these challenges, economists urge Beijing to avoid over-reliance on exports for growth, recommending more economic stimulus to stabilize the economy.

ANZ analysts forecast a policy response involving monetary measures and other strategies to mitigate Trump-era tariff pressures.

“Authorities may also implement measures to cushion the tariff impact, such as subsidies or better access to financing,” said Raymond Yeung, ANZ’s chief economist for Greater China. He added that policy initiatives could also focus on domestic consumption campaigns and diversifying export markets within Belt and Road countries.

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China’s BYD prepares to launch latest SUV, the Sealion 07, in Europe despite EU tariffs

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BYD, the world’s largest electric vehicle (EV) maker, is set to launch its latest SUV, the Sealion 07, in Europe, undeterred by recent tariff increases on Chinese-made electric vehicles. This strategic move highlights BYD’s commitment to expanding overseas sales despite economic barriers.

Deliveries of the Sealion 07 are scheduled to begin in 2025, marking BYD’s seventh all-electric model in the European market, the company announced on Wednesday. Additionally, BYD plans to enter the South Korean market next year, adding to its existing presence in 95 countries worldwide.

This European expansion comes on the heels of the European Union’s decision last month to impose new tariffs—ranging from 17% to 35.3%—on Chinese electric vehicles following an anti-subsidy investigation. BYD’s EVs are subject to a 17% tariff, in addition to the standard 10% tariff applied to all pure electric cars imported from China. These tariffs, which took effect last month, will remain in place for five years. Meanwhile, U.S. tariffs on Chinese-made EVs increased from 25% to 100% as of September, citing similar concerns.

Despite the added costs, BYD’s vehicles continue to hold strong appeal in export markets. “BYD’s vehicles remain attractive even after the additional tariffs, so it’s not really a big problem for the company,” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, a leading industry consultancy. “The Sealion 07 exemplifies how BYD’s cost advantage enables it to counteract such trade barriers in key export markets.”

Shenzhen-based BYD has yet to disclose the European pricing for the Sealion 07. On the mainland, the SUV—featuring a range of 450 kilometers—starts at 189,800 yuan (approximately US$26,272), with deliveries beginning in May.

According to a report last year from UBS analysts, BYD has a sustainable cost advantage of 25% over traditional European brands.

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Singles’ day promotions target overseas Chinese as China’s domestic demand slows

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After last year’s Singles’ Day shopping festival in China was dubbed the “quietest in history,” China’s e-commerce platforms focused on a new strategy this year.

For this year’s Singles’ Day event, major e-commerce companies such as Alibaba, JD.com, and Pinduoduo invested heavily in expanding overseas markets, targeting the estimated 100 million Chinese living abroad with offers like discounts and free or low-cost shipping.

The central question, however, is not whether these efforts will succeed in the short term, but rather if this shift can help platforms grow their user bases as online sales growth in China reaches a bottleneck.

“Domestic consumption is quite weak right now, and every company is certainly considering new ways to drive growth for Singles’ Day,” said an executive at a leading online retailer, who requested anonymity. “The overseas market is widely seen as a promising source for additional growth,” he added in an interview with Nikkei Asia.

Singles’ Day, a one-day sales event launched by Alibaba in 2009 as a celebration for singles, has since evolved into a month-long campaign with special offers and deep discounts, culminating on or around November 11.

This year, China aimed to revitalize its retail sector with the event. Total consumer goods sales rose by 3.3% year-on-year in the first three quarters of 2024, though high-end consumer spending remained stagnant. Cosmetics sales fell by 1%, while gold and silver jewelry sales declined by 3.1% year-on-year.

Last month, Alibaba’s Taobao launched a significant marketing campaign in Hong Kong and Taiwan, flooding subway stations with advertisements for “free shipping on orders over 99 yuan,” among other offers. According to the company, the campaign cost 2 billion New Taiwan dollars ($61.7 million) in Taiwan and 1 billion yuan ($138 million) in Hong Kong.

Following Alibaba’s move, JD.com announced it had invested 1.5 billion yuan to offer discounted product prices and cheaper shipping to Hong Kong shoppers. Bargain platform Pinduoduo took it a step further, offering free shipping via courier SF Express for Hong Kong shoppers, regardless of the item’s price. All products on these platforms are shipped from mainland China.

A spokesperson from Alibaba’s International Digital Commerce Group noted that since the overseas initiative launched in October, Taobao Hong Kong has achieved double-digit growth in both orders and gross merchandise value (GMV)—a metric that excludes canceled orders—on both a monthly and year-on-year basis.

The platforms are also targeting Chinese shoppers in Malaysia, Thailand, and Singapore.

This year, unlike in previous years, shoppers could combine online discounts with a subsidy program introduced by the Chinese government to boost domestic consumption, primarily for home appliances and household products. Analysts suggest these incentives will likely boost sales for JD.com, which is known for selling high-quality large appliances and offering after-sales services.

While JD.com has yet to release sales or GMV figures for home appliances during the shopping festival, it is expected to share its June-September results, along with Alibaba, later this week.

Last year, data provider Syntun estimated that total GMV on major e-commerce platforms grew by only 2.1% to 1.14 trillion yuan, falling short of the 2.9% growth forecast for 2022. Similarly, consultancy Bain predicted that Singles’ Day sales would reach 1.15 trillion yuan in 2023.

On Tuesday morning, Alibaba announced “strong GMV growth” and a “record number” of active shoppers for this year’s Singles’ Day event.

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Japanese PM Ishiba to lead fragile minority government

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Japanese lawmakers voted on Monday to retain Prime Minister Shigeru Ishiba as leader after his scandal-plagued coalition lost its parliamentary majority in the House of Representatives elections last month.

Ishiba, who has called for early elections since taking office on October 1, now faces the challenge of leading a fragile minority government amid Donald Trump’s return to office, rising tensions with China and North Korea, and increasing domestic pressure to address the cost-of-living crisis.

As expected, Ishiba won 221 votes, surpassing his closest rival, former Prime Minister Yoshihiko Noda of the Constitutional Democratic Party, but he still fell short of a majority in the 465-seat House of Representatives.

Japan’s Upper House elections are scheduled for next year, where the ruling coalition’s slim majority could be at risk if Ishiba cannot restore public confidence shaken by recent scandals over off-the-books donations to lawmakers.

Amid pressure from voters and opposition parties to increase welfare spending and stabilize rising prices, Ishiba’s primary challenge is to prepare a supplementary budget for the fiscal year ending in March. This budget will require support from at least one opposition party to pass, likely the Democratic Party for the People (DPP), led by Yuichiro Tamaki.

While Tamaki has held cooperation talks with Ishiba, DPP lawmakers on Friday did not vote to retain Ishiba as prime minister. Tamaki himself faces scrutiny after acknowledging an extramarital affair, which was reported by a tabloid on Monday.

Following his reappointment, Ishiba appointed new ministers for transport, justice, and agriculture to replace LDP lawmakers who lost their seats in the House of Representatives.

Looking ahead, Ishiba must prepare for key international engagements, including the G20 summit in Brazil on November 18-19. He is also working to coordinate a visit with Trump in the US, aiming to reestablish a close relationship with the U.S. president-elect.

During Trump’s first term (2017-2021), Japan largely avoided protectionist trade measures and cost-sharing demands for the US military presence thanks to Trump’s strong relationship with then-Prime Minister Shinzo Abe—a rapport Ishiba seems eager to rebuild.

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