October Trade Data: Still Awaiting External Rebalancing

China's October trade data finally showed some signs of a slowdown on the domestic demand front. While the surplus came in above consensus at US$27.2bn, up from US$16.9bn in September, the widening was entirely due to falling imports given that exports also surprised to the downside. Our view remains that both import and export growth will be weak over the coming quarters and both may have in fact peaked already for 2010. We continue to see import growth outpacing export growth going forward, and therefore expect more months of downside surprises on the export front.

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