China: Jump in September export growth is not sustainable – Nomura

Analysts at Nomura note that China’s export growth in USD terms jumped to a stronger-than-expected 14.5% y-o-y in September from 9.8% in August (Consensus: 8.2%; Nomura: 8.5%), while import growth fell further to 14.3% from 20.0% (Consensus: 15.3%; Nomura: 12.5%).

Key Quotes

“The trade surplus widened to USD31.7bn from USD27.9bn. We believe the exceptionally high export growth in September was partially driven by frontloading, as exporters hurried their delivery of goods to the US so that they arrive before the US increases tariff rates in January 2019.”

“The Chinese government’s hike of the export tax rebate rates also helped to boost exports. We believe double-digit export growth could sustain through Q4 2018 but it will most likely tumble in Q1 2019 once tariff increases become effective.”