Event: on December 7, 2021, the General Administration of Customs released the import and export data of November. Exports (in US dollars) increased by 22% year-on-year, the market expected to increase by 17.2% and the previous value by 27.1%; imports (in US dollars) increased by 31.7% year-on-year, the market expected to increase by 18.2% and the previous value by 20.6%.
Core view:
The export completely met our expectations and slightly exceeded the market expectations, It continues to show strong resilience (for details, please refer to our report “relaxation of supply constraints, economic stabilization and recovery – economic data forecast in November 2021” released on December 1 ）。 Exports remained strong. On the one hand, supported by the Christmas consumption season, the growth rate of toys, LCD screens and other categories rebounded sharply. On the other hand, the growth rate of industrial exports continued to rise from a high level, mainly driven by the expansion of total demand of the global economy.
Looking ahead, we expect that export growth will peak in the fourth quarter and fall in the first quarter of next year, but the decline rate is slow. The support of European and American fiscal stimulus for consumption began to fall, which determined that the downward direction of export growth in the future was certain. After the Christmas holiday and the warmer weather in the first quarter, it is expected that the constraints of the epidemic on the return of labor force to the market will also be weakened, the supply and demand gap in Europe and the United States will converge, and the dependence on China’s production capacity will also be reduced. However, the development of overseas epidemic is still uncertain, the blockage of the supply chain in the United States has not been alleviated, and the vaccination speed in Southeast Asia is slow, so that China’s exports can still benefit from the epidemic prevention dividend in the short term, and the decline speed is slow. Christmas consumption and aggregate demand expanded, driving exports higher than expected.
On the one hand, this month’s exports are supported by the Christmas consumption season. Toys and LCD panels have a large upward growth rate this month. on the other hand, The growth rate of industrial products (steel, aluminum and plastic products) also continued to rise slightly from a high level, mainly driven by the expansion of total demand brought by the global economic recovery. With the cessation of unemployment subsidies in Europe and the United States and the return of labor to the market, the export growth rate of furniture and lamps related to the “housing economy” fell. The export growth rate may start to decline in the first quarter of next year, but the downward rate is slow.
The downward direction of export growth is determined. Exports continued to exceed market expectations in 2021 because the United States launched a new round of cash distribution and unemployment subsidies in January this year to support residents’ consumption demand and inhibit the return of labor force to the market. However, as the United States stopped paying pandemic unemployment subsidies in September this year, the support of fiscal stimulus for exports will continue to decline, and the downward direction of export growth has been determined.
It is expected that the export growth rate will peak at a high level in the fourth quarter of this year and enter the downward range in the first quarter of next year, but the downward speed is slow and the export still has strong toughness. After the Christmas holiday and the warmer weather in the first quarter, it is expected that the constraints of the epidemic on the return of labor force to the market will also be weakened. However, considering that the development momentum of overseas epidemic is still uncertain, the blockage of supply chain in the United States has not been alleviated, and vaccination in Southeast Asia and other countries is relatively backward, China’s exports will still benefit from epidemic prevention dividends in the short term, with strong toughness.
The import is not weak and is optimistic about the manufacturing investment in 2022.
The import growth rate in November also greatly exceeded market expectations. This year, driven by strong exports, import momentum has not been weak. In November, the PMI index of manufacturing industry also rebounded beyond expectations. After the relaxation of supply constraints, the demand side of manufacturing industry also rebounded significantly. We believe that under the background of slow decline in export growth and strong resilience of foreign demand, driven by domestic substitution and green investment, the superposition of steady growth policies will gradually take effect, and the manufacturing investment will still maintain a moderate recovery. We are optimistic about the manufacturing investment in 2022.
