China exports rebound in October after surprise slump

Tomohiro Ohsumi | Bloomberg | Getty Images

China's export growth rebounded in October after a tumble the month before, but economists say it's too early to call a turnaround in global demand.

Exports from the world's second biggest economy rose by 5.6 percent in October from a year earlier, official data showed on Friday. This was well above economists' forecast for a rise of 3.2 percent, according to a Reuters poll, and marked a recovery from a surprise 0.3 percent slump in September.

Imports, meanwhile, rose 7.6 percent, slightly below forecasts for a rise of 8.5 percent. The country's monthly trade surplus widened to $31.1 billion from $15.2 billion in September.

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"Combined with the better export data in Korea and Taiwan, China's export numbers suggest some improvement in global demand momentum. However, it seems too early to call this a decisive upswing," said Louis Kuijs Chief China Economist at RBS.

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South Korean exports jumped by 7.3 percent in October from a year earlier, following a 1.5 percent decline in the previous month. While Taiwan's exports slumped eased, declining 1.5 percent, after a 7 percent fall in preceding month.

Export data from the two Asian economies are often viewed by economists as a leading indicator of the health of the world economy.

Hao Zhao, China economist at ANZ, said that while demand out of the U.S. and Europe appears to have recovered from September, the external demand picture is still cloudy. On Thursday, the European Central Bank delivered an unexpected cut in interest rates to boost economic growth in the euro area.

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"The outlook is not that good for China's exports as seen in the results from the Canton Fair," he said.

Export contracts signed at the recent Canton Fair - the country's biggest trade fair that takes place twice a year - fell to their lowest in four years, state media reported after the event ended on Monday.

Investors get a deeper insight into how China economy is faring, with the release of October inflation, fixed asset investment, retail sales and industrial output data on Saturday.

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Market focus is also expected to fall on China's Third Plenum which kicks off this weekend. It is the third meeting of China's Central Committee since a once-in-a decade leadership change took place a year ago.

—By CNBC's Ansuya Harjani; Follow her on Twitter: @Ansuya_H