China's exports grew at the fastest pace in over two years in October as factories rushed inventory to major markets in anticipation of further tariffs from the U.S. and the European Union, as the threat of a two-front trade war loomed large.

Donald Trump's sweeping victory in the U.S. presidential election has brought into sharp focus his campaign pledge to impose tariffs on Chinese imports in excess of 60% and is likely to spur a shift in stocks to warehouses in China's No.1 export market.

Trump's tariff threat is rattling Chinese factory owners and officials, with some $500 billion worth of shipments annually on the line, while trade tensions with the EU, which last year took $466 billion worth of Chinese goods, have intensified.

Export momentum has been one bright spot for a struggling economy as household and business confidence has been dented by a prolonged property market debt crisis .

Outbound shipments from the world's second-biggest economy grew 12.7% year-on-year last month, customs data showed on Thursday, blowing past a forecast 5.2% increase in a Reuters poll of economists and a 2.4% rise in September.

Imports fell 2.3%, compared with expectations for a drop of 1.5%, turning negative for the first time in four months.

China's trade surplus grew to $95.27 billion last month, up from $81.71 billion in September.

"We can anticipate a lot of front-loading going into the fourth quarter, before the pressure kicks in come 2025," said Xu Tianchen, senior economist at the Economist Intelligence Unit.

"I think it is mainly down to Trump. The threat is becoming more real."

TRUMP EFFECT

China's exports to the U.S. increased an annual 8.1% last month, while outbound shipments to Europe jumped 12.7% over the same period.

"We expect shipments to stay strong in the coming months," Zichun Huang, China economist at Capital Economics, said in a note. "Any potential drag from Trump tariffs may not materialise until the second half of next year."

Source: Reuters
 

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