KEY POINTS

  • China's exports jumped to their highest since March 2019
  • China's trade with U.S., Europe, Australia grew strongly
  • U.S., EU are struggling with a new wave of COVID-19 infections

China’s exports surged to their highest in the past 18 months in October, indicating its rapid recovery from the blows of the coronavirus even as major economies continue to struggle.

With the COVID-19 pandemic overpowering the world, China’s exports have thrived as demand for its medical equipment and electronic products touched all-time highs.

China’s exports to its major trading partners including the U.S., European Union and other Asian countries grew strongly in October. 

China’s trade surplus with the United States was nearly $31.37 billion in October, up from $30.7 billion in September. However, due to a delay in the fiscal aid and an increase in the number of cases, the U.S. economy is struggling. Fed Chair Jerome Powell said Thursday that the trajectory of COVID-19 remains key to the U.S. recovery and until it is eradicated, more emergency spending will be "essential" to support the economy.

Meanwhile, many European economies have gone back into lockdown to prepare for a winter wave of the coronavirus. Governments in the European Union are struggling to support furloughed and unemployed workers and keep businesses afloat. There is hope that this second lockdown will not hurt as much as the first one, as schools and factories are open for the time being, The New York Times reported.

Market conditions in the U.S. and EU, China’s major trade partners, make the Chinese economy vulnerable as well. The resurgence of infections in key markets will impact demand, which is why economies like China and India have promoted local consumption to support growth.

India saw its biggest economic contraction in 24 years in Q1 of around 24%, with the virus spreading faster than any other country. In May, Prime Minister Narendra Modi had announced a $266 billion stimulus package for the poor, but consumer spending in the country is yet to pick up.

Australia has plunged into its first recession in almost 30 years. Its GDP shrank 7% in the quarter that ended in June compared to the previous quarter.

China’s trade war with Australia has escalated in the past few months as the Asian superpower put sanctions on Australian wine and other farm products recently. Despite this, trade between the countries strengthened in the past month, but tensions may still spell uncertainty for Chinese exports.

China's exports were 11.4% higher and imports grew by 4.7 percent over the year-ago period in October, according to official data, its strongest growth since March 2019.

However, imports dipped as compared to the previous month. The country’s trade surplus stood at $58.44 billion, up from September’s $37 billion.

“China has a better recovery from the pandemic and has a comparative advantage, so it has gained a larger market. Of course, this advantage is also temporary and may last until the end of the year,” Zhou Hao, an economist at Commerzbank, told CNBC.