China’s trade data for September tells a mixed story on exports and imports. Most importantly, it underscores a significant historical change in demand patterns. While China’s overall exports increased by 8.4% year-over-year, the country’s rare earth export growth experienced a sharp moderation. China’s sales to markets outside the US have exploded, making up for the trade disaster and then some. Most notably, this expansion is driven by the major markets of South Africa, India, the European Union (EU), and Southeast Asia.
In September, China’s exports grew year on year by 8.4%, the fastest rate in six months. The very robust performance above is all the more remarkable when contrasted with the continuing, sharp plunge of exports to the United States. That’s shipments are down 27.0% from the same month a year ago (YOY). This contraction is a record sixth month in a row of year-on-year decline in exports to the US starting from April.
Even as US exports shrank, China’s trade still held firm, mostly thanks to heightened demand from other markets around the world. Exports to South Africa jumped by 23.3%. Shipments to India and the EU jumped by 14.4% and 14.2%, respectively. The Association of Southeast Asian Nations (ASEAN) once again proved to be the fastest-growing market, with exports up 15.6%. What’s more, Vietnam managed a remarkable one-year 24.5% growth in exports derived from the People’s Republic. Thailand and Indonesia were a very close third and fourth at 19.7% and 17.1% growth, respectively.
China’s imports jumped 7.5% year-on-year in September. This increase contributed to a record-high trade surplus of $19 billion. Yet this trade expansion was accompanied by a sharp reduction in China’s trade surplus, to USD 90.45 billion over the same period.
China’s state-controlled media has reported on an ongoing and steep fall in Chinese rare earth shipments. They collapsed by 30.9% from August to September, corresponding to a minuscule 4,000 tons. This major mining concentration would have a profound effect on global supply chains, since rare earth elements are essential to many high-tech industries.
The contrasting trends between exports to the US and other regions underscore the evolving landscape of global trade for China. Geopolitical tensions and new trade policies are upending economic relationships. In order to maintain this growth, China will need to change and develop alternate export markets.