Event: in US dollars, the export in November 2021 was 22.0% year-on-year, 17.2% expected, and the previous value was 27.1%; Imports were 31.7% year-on-year, 18.2% expected, and the previous value was 20.6%; The trade surplus was US $71.72 billion, compared with the previous value of US $84.54 billion.
Core conclusion: exports continue to be strong this year, and the decline next year should be the benchmark situation, but the toughness is still strong, and the pace of decline remains to be observed.
1、 Prices continued to support exports beyond expectations, and the marginal contribution of quantity improved. We focused on the overseas epidemic, production recovery and completion. In US dollars, the export amount in November was US $325.53 billion, another record high; The year-on-year increase was 22.0%, lower than 27.1% of the previous value and higher than 17.2% of the market expectation; Increased by 8.4% month on month, Stronger than seasonality (the average month on month growth rate in 2010-2019 was 6.6%). Generally speaking, prices are still an important support for exports exceeding expectations; at the same time, high-frequency data show that foreign demand is also strong, including the rebound of manufacturing PMI in major global economic systems in November, and the two-year compound growth rate of exports of South Korea, which is similar to China’s export structure, also reached 17.2% in November, a new high since October 2018, indicating foreign demand Strong.
Export price: the price factor is still an important support, and the quantity factor has also improved. According to the quantity of more than 7000 export commodities with HS 8-bit code Price splitting (compared with the basic data in the previous report, it is found that the contribution of quantity to exports is highly correlated with PMI new export order index. In October, PMI new export order index rebounded slightly by 0.4 percentage points to 46.6%, and the contribution of quantity to exports rebounded simultaneously by 11.5 percentage points to 36.8%; in November, PMI new export order index further rebounded by 0.9 percentage points to 48.5%, indicating the increase of quantity The contribution of factors to exports is also expected to increase (the volume and price data of subdivided commodities in November are expected to be updated on December 18). In terms of reasons, the increase in the contribution of quantitative factors should be related to overseas Christmas stock.
Export commodities: the export of epidemic prevention materials rebounded, the export of mechanical and electrical products was strong, and the completion chain fell back. 1) As the overseas epidemic rebounded again, the exports of plastic products and medical devices increased by 10.9% and 8.7% month on month respectively in November, both higher than the previous value and 8.4% month on month as a whole, and the exports of textiles (masks, etc.) increased by 6.0% month on month, slightly lower than the overall month on month, but significantly higher than the previous value of 0.7%.
2) In November, the export of mechanical and electrical products increased by 9.0% month on month, pointing to the recovery of overseas production, which is consistent with the signal conveyed by the rebound of manufacturing PMI in major economies such as the United States, the euro zone and Japan in November. 3) The completed industrial chain fell back as scheduled. In the previous report “how long can strong exports last? Also on the halving of freight rates”, we pointed out that considering the sharp decline in new home sales in the United States for several consecutive months, the demand for the subsequent completed chain may weaken; In November, exports of furniture and lamps increased by 8.2% and 5.5% month on month, both lower than the overall growth rate.
In terms of export countries: the growth rate of exports to the United States and Japan in November was lower than the overall growth rate, of which the growth rate of exports to the United States fell sharply by 17.4 percentage points to 5.3%, This was mainly due to the high base in the same period last year (from October to November 2020, exports to the United States were 22.5% and 46.1% respectively year-on-year); exports to the EU increased by 33.5% year-on-year, higher than the overall growth rate; exports to ASEAN, India, Brazil and other emerging market countries were higher than the overall growth rate.
2、 Imports greatly exceeded expectations, energy imports and price factors were the main support, and the contribution margin of domestic demand was strengthened
In US dollars, the import amount in November was US $253.81 billion, another record high; An increase of 31.7% year-on-year, higher than the previous value of 20.6% and the expected 18.2%; The month on month increase of 17.6% was stronger than the seasonal law (the average month on month increase in 2010-2019 was 9.9%). Overall, the import in November was much higher than expected. In addition to price, exchange rate and other factors, the sharp increase in energy import and the improvement of the margin of domestic demand were also important supports.
Energy import: in November, the import of coal, lignite, crude oil and refined oil increased by 762.6%, 80.1% and 102.4% respectively year-on-year, supporting the import growth rate by about 6.8 percentage points; In other words, if these three items are excluded, the year-on-year growth rate of import amount will fall back to about 24.9%.
Domestic demand: in November, the manufacturing PMI returned to above the boom and bust line (50.1%) after two months, pointing to the marginal improvement of China’s economy due to the correction of real estate and production restriction, which means that the marginal support of domestic demand for imports may be strengthened.
Price: in November, the CRB spot index rose 35.6% year-on-year, indicating that the price factor is still an important support for imports.
Exchange rate: in November, the average monthly exchange rate of US dollar against RMB was 6.39, with a year-on-year appreciation of about 3.3%. The appreciation of RMB still supports imports.
3、 Follow up outlook: continue to remind not to underestimate the resilience of exports, and pay attention to the evolution of the epidemic, the progress of China US negotiations and multilateral cooperation agreements
Export: maintain the judgment in the annual strategy “changing and breaking situation – macroeconomic and asset allocation outlook for 2022”. Considering the global slowdown, weakening price support, rising base center and other factors, the subsequent growth rate of China’s export tends to decline, but the pace of decline still needs further observation. It is inclined to think that the export toughness is still strong. The most important disturbance in the near future is the influence of Omicron mutant, because the variation of Omicron spike protein is more than twice that of delta virus in the early stage, Who speculates that the virus may have evolved to be more transmissible and toxic (specific confirmation needs testing time). If the subsequent Omicron mutant proves that it has stronger transmission ability and toxicity, and can bypass part of the immune system, the global epidemic prevention and control may be tightened again. China’s stable supply chain has a strong attraction to overseas manufacturers. Superimposed with the blockade caused by the epidemic, the blocking time of the global supply chain may be prolonged, and the export price may be delayed Continued high, China’s exports may continue to exceed expectations. In addition, we should also pay attention to the changes in China’s trade environment, including possible tariff relief between China and the United States, and the progress of regional multilateral cooperation agreements such as RCEP and cptpp.
Import: continuing the previous judgment, the current factors supporting import are weakening. It is expected that the import may gradually decline, and the short-term reading should not be too bad under the support of the base. 1) Energy import: taking into account factors such as the decline of coal price, nuclear increase of production capacity and the decline of international oil price, the subsequent energy import may decline, and the support of energy items for import may be weakened; 2) Domestic demand: there is still great downward pressure on the economy, Q4 GDP growth may break “4%”, and the support of domestic demand for imports is still weak; 3) Exchange rate: the Federal Reserve has turned to tightening, China’s policy has turned to steady growth, the dislocation of China US monetary policy may exacerbate the pressure of RMB devaluation, and the support of exchange rate factors for imports tends to weaken.
Risk tip: the epidemic situation, China US relations, policy strength and other unexpected changes.
