By Gabriel Crossley and Stella Qiu

BEIJING, Oct 13 (Reuters)China’s imports grew at their fastest pace this year in September, while exports extended their strong gains as more trading partners lifted coronavirus restrictions in a further boost to the world’s second-biggest economy.

Exports in August rose 9.9% from a year earlier, customs data showed on Tuesday, broadly in line with analysts’ expectations for 10% growth and up from a solid 9.5% increase in August.

The strong trade performance suggests Chinese exporters are making a brisk recovery from the coronavirus pandemic’s hit to overseas orders. As the global economy restarts, Chinese firms are rushing to grab market share as their rivals grapple with reduced manufacturing capacity.

China’s factory activity has also picked up as international trading gradually resumes.

But some analysts warn exports could peak soon as demand for Chinese-made protective gear recedes and the base effect of this year’s massive declines wears off.

Imports surged 13.2%, returning to growth from a slump of 2.1% in August and much stronger than expectations for a 0.3% increase.

The country’s trade surplus for September stood at $37 billion, compared with an expected $58.00 billion surplus forecast in the poll and a surplus of $58.93 billion in August.

Already heightened U.S.-China tensions are expected to escalate ahead of the U.S. presidential election. China remains well behind on its pledge to boost purchases of U.S. goods under an agreement that was launched in February.

China’s trade surplus with the United States narrowed to $30.75 billion in September from $34.24 billion in August.

Top U.S. and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal in a phone call in August.

However, U.S. Department of Agriculture Secretary Sonny Perdue cast doubt earlier this month on the likelihood of China meeting

BEIJING (Reuters) – China’s exports likely posted a fourth straight month of gains in September as more trading partners reopened their economies, a Reuters poll showed, while imports are also expected to have edged back into growth.

Exports have not been as severely affected by the global slowdown as some analysts had feared, due in part to record shipments of medical supplies and robust demand for electronic products, adding to hopes for a sustained economic recovery.

In September, exports are expected to have risen 10% from a year earlier, according to a median estimate of a Reuters poll of 24 economists. Imports likely rose 0.3% on year, improving after back-to-back decline in July and August.

Exports in August rose a solid 9.5% year-on-year, the strongest gain since March 2019.

Stronger exports could signal a faster and more balanced recovery for the Chinese economy, which is rebounding from a record first-quarter slump thanks to domestic stimulus measures.

A manufacturing survey showed total new orders in September recorded the strongest increase since January 2011, and a gauge for new export orders–which were hit hard by the global outbreak of the coronavirus–rose at the fastest pace in over three years.

“We expect both export and import growth to accelerate further in September. Global growth has continued to recover and strong global housing activity in recent months should support Chinese exports of furniture and appliances,” Goldman Sachs analysts said in a research note last week.

“Import growth may improve in September as well on the back of the solid expansion of domestic activities,” they said.

However, external demand could suffer if virus control measures are re-imposed by trade partners due to a resurgence in infections.

China is meanwhile looking to reduce its reliance on overseas markets for development as U.S. tensions and the pandemic

(Bloomberg) — China’s yuan strengthened and stocks rose on mainland exchanges in a positive start to the month for traders returning to work after an eight-day holiday.

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The currency advanced 1.1% as of 9:53 a.m. in Shanghai, tracking recent moves in the offshore rate. The People’s Bank of China set its yuan fixing at 6.7796 per dollar on Friday — or slightly stronger than expected — suggesting it will continue to allow for currency gains after the yuan had its best quarter since 2008 versus the greenback.

“Markets will take any indication that the authorities are not too concerned about the level of the yuan as a positive sign,” said Khoon Goh, head of research at Australia & New Zealand Banking Group Ltd. “In effect, not sending a signal is in itself a signal.”

The Shanghai Composite Index of stocks rose 1.4% and the CSI 300 Index climbed 1.7%. China’s $9.4 trillion onshore equity market last traded on Sept. 30.



chart: China's yuan strengthens toward 6.7 per dollar


© Bloomberg
China’s yuan strengthens toward 6.7 per dollar

Solar and technology stocks were among the biggest gainers in early trade. Longi Green Technology Co. surged 9.3% to hit a record high. Lens Technology Co. rose 7.4% and GoerTek Inc. added 6.3%.

“Stocks are getting a boost from the better-than-expected consumption data during the Golden Week holidays and a strong yuan,” said Daniel So, strategist at CMB International Securities Ltd. “Investors are looking forward to the Communist Party meeting toward month-end, before which market sentiment has usually been positive, as more stimulus policies are expected.”

China is unique among major economies to close its financial markets for long periods several times a year. In February, stocks were hit by a ferocious wave of selling and the yuan weakened past a key level against the dollar, as a rapidly

The People’s Bank of China and the Ministry of Housing announced in August that they’d drafted new financing rules for real estate companies, but have said little more. But the media reports and people familiar with the upcoming guidelines have said developers wanting to refinance will be assessed against three red lines, or thresholds:

• There will be a 70% ceiling on liabilities to assets, excluding advance proceeds from projects sold on contract;

• a 100% cap on net debt to equity;

• and they must have a cash to short-term borrowing ratio of at least one.

Developers will be categorized based on how many limits they breach and their debt growth will be capped accordingly. If all three are breached, the company won’t be allowed to increase its debt in the following year, according to a report by 21st Century Business Herald. If it passes all three, it can increase its debt a maximum of 15% in the next year. As the regulator hasn’t announced its official calculations, some definitions aren’t clear.

A big part is fear of another housing bubble — and a disastrous bust. Home prices have surged six-fold over the past 15 years, making cities such as Shenzhen less affordable than London. The debt binge by Chinese builders has been an important driver of rising prices, forcing them to charge more to cover a rising interest burden. Potential buyers returned en masse as the pandemic crunch eased, keeping pressure on prices despite the global economic slowdown. The worry is that China could repeat Japan’s mistake in the 1990s of not reining in excessive credit and shutting down insolvent borrowers quickly enough, causing long-term damage to growth in the world’s No. 2 economy. Even before Evergrande’s brief liquidity scare, concern had intensified after Tahoe Group Co. in

Joe BidenJoe BidenQuestions remain unanswered as White House casts upbeat outlook on Trump’s COVID-19 fight CNN anchor confronts senior Trump campaign adviser after motorcade: Trump’s ‘downplaying the virus’ Biden again tests negative for COVID-19 MORE’s plan for climate change and environmental justice attacks China for financing fossil fuels. If the United States wants to green China’s overseas energy finance, it must compete by offering attractive funding for cleaner alternatives, such as solar and wind power.

China’s overseas energy finance has had a large impact on energy development around the world. According to Boston University’s Global Development Policy Center, Chinese policy banks provided energy finance worth $251 billion outside China between the years 2000 and 2019. Of this total, $26 billion funded coal and $88 billion funded oil.

China’s energy infrastructure footprint will play a decisive role in accelerating or mitigating climate change. The emerging economies that rely on Chinese finance to meet their growing investment needs often have few alternatives, given their low credit ratings. For example, Pakistan’s plans to expand its power generation capacity are financed largely by China.

However, China’s policies are not the primary reason for investment in coal, oil and gas. Our research at the Initiative for Sustainable Energy Policy (ISEP) shows that both Chinese project developers and state-owned policy banks are primarily interested in developing business in the recipient countries, with little interest in fossil fuels in particular. China’s energy finance is opportunistic, not strategic, in nature. China is willing to finance a wide range of projects, as long as the project developer is a Chinese company.

If recipient countries, from Bangladesh to Pakistan, decided to abandon coal, China would follow suit. Recipient countries are still building coal-fired power plants because they do not have enough experience or mature market mechanisms to support