China Exports Rose for Seventh Straight Month in September -- Update

China reported a strong rise in both exports and imports last month, underlining the resilience of the world's second-largest economy before an important Communist Party congress, which starts next week.

China's exports grew 8.1% in September from a year ago, the General Administration of Customs said Friday. It was the seventh straight monthly gain, though the increase came in below a 10% forecast by economists polled by The Wall Street Journal.

The improvement in exports has been a significant factor in China's stronger-than-expected economic growth in the first half of 2017, a reversal of their role as a drag on expansion in the previous two years. Exports rose 5.5% in August.

Imports climbed 18.7% in September, beating forecasts and the previous month's 13.3% gain. They have been growing at a double-digit pace since January, the result of both rising commodity prices and improving domestic demand.

The continued strength in the country's imports is welcome news globally, with many economies, especially in Asia, heavily reliant on Chinese demand.

The International Monetary Fund has raised its forecast for several Asian economies this year to reflect its more upbeat view of global demand and China's unexpected resilience.

The stronger imports narrowed China's trade surplus to $28.47 billion in September from nearly $42 billion the previous month. The latest surplus was the smallest in six months and fell short of economists' forecast.

However, China's trade surplus with the U.S. expanded to $28.08 billion from $26.23 billion in August, the highest monthly surplus on record, according to official data and Wind Information, a local database that tracks the data to 1995.

The widening surplus with the U.S. may prompt the Trump administration, which in August launched a probe into Chinese intellectual-property theft, to take further retaliatory steps. President Donald Trump is set to visit China in early November.

"Strong demand boosted by a recovering global economy provides a favorable external condition for China's export growth," said Huang Songping, a spokesman for China's Customs Bureau, at a briefing Friday.

Exports have received a particular boost this year from the rollouts of new smartphones by Apple Inc. and Samsung Electronics Co., which have helped fuel shipments of related electronic components throughout Asia.

The latest data from South Korea, Taiwan, Singapore and Malaysia all point to surging electronics demand. Electronics exports made up 57.5% of China's total overseas shipments in the first three quarters of the year.

Mr. Huang said China's overall trade might grow at a double-digit rate this year, compared with a 0.9% drop in 2016.

With global demand recovering, China has largely avoided a slowdown that had been widely expected to hit this year.

"Thanks to robust global demand, we haven't seen any substantial slowdown that many had expected at the beginning of the year," said Liu Xuezhi, an economist with Bank of Communications.

Economists polled by The Wall Street Journal predict third-quarter growth data due next week to show a slight slowing, to 6.8% compared with a 6.9% pace in the first half.

Such a growth rate would enable Beijing to easily meet its 6.5% growth target for the full year and strike a positive note as the Communist Party prepares a leadership shuffle at its twice-a-decade conclave set to begin Oct. 18, economists said.

However, Mr. Liu said a continuing appreciation of the yuan would hurt the country's exports, as the strengthening currency makes Chinese goods more expensive in global markets.

Exporters such as Chen Yangfan have already felt the pinch.

"Our profit margin is narrowing this year mainly due to the appreciating yuan, though there is an obvious market recovery," said Mr. Chen, a manager at Chinatop Home Products Manufacturing Co., based in southern Guangdong province.

The Chinese currency has strengthened more than 5% against the dollar so far this year, placing a greater burden on small exporters such as Mr. Chen. His company, now busy with Christmas orders from North America for its kitchenware, relies on a tax rebate implemented by Beijing to support exports to offset some losses from the yuan's appreciation.

"We keep the price unchanged for a quarter to retain some clients, even though the yuan has appreciated a lot. We will suffer more losses if the yuan keeps rising," said Mr. Chen.

Also, foreign direct investment in China rose 17.3% from a year ago to 70.63 billion yuan ($10.71 billion), the Commerce Ministry reported Friday.

Grace Zhu and Liyan Qi

(END) Dow Jones Newswires

October 13, 2017 03:37 ET (07:37 GMT)