Despite supply chain and production issues and Evergrande's setbacks, which continue to raise investor fears, China's foreign trade is doing well.
In September, exports increased by 28.1% compared to September 2020 and reached the highest level ever recorded, approaching USD 306 billion (around €265 billion) in that month alone.
These very high figures show that despite the global economy's risks, demand remains high – particularly demand for Chinese products, allowing the country's trade balance to show a surplus of around USD 66.7 billion (about €57.8 billion), an order of magnitude never seen before the pandemic.
Equally important, exports to the United States increased by 30.6% year-on-year (compared to 15.5% in August), pushing the US trade deficit against China to some USD 42 billion.
Therefore, the United States alone is responsible for 2/3 of China's trade surplus, despite President Trump's tariffs on Chinese products, which remained in force under Biden.This may displease Washington and do nothing to ease the already tense relationship between the two largest economies on the planet.
While it is inevitable that China is facing some significant challenges and recent interventions by Beijing are undermining the visibility of the country's businesses for the future, it is also confident that the country continues to have immense potential.
We continue to invest in Chinese equities as part of our neutral portfolio.