China’s November trade data is out on Monday. While the trade truce and the US’s tariff reductions should be a positive for Chinese exports, we are now entering a period of unfavourable base effects. This should keep trade growth modest. We are looking for 3.3% year-on-year growth in exports and 3.4% growth in imports, resulting in a trade surplus of $100.3bn. We expect CPI inflation for November, out on Wednesday, to continue its recovery, rising to 0.5% YoY. This would represent progress after last month’s return to positive territory. The main reason is that the drag from food prices is fading. This, combined with the recent upward momentum in non-food prices, should boost inflation. Overall, inflation remains quite low, but preventing a deflationary mindset from settling in is important to maintaining a healthy long-term consumption and investment trajectory. Low positive inflation will likely play a limited role in People’s Bank of China decision-making.
