07.11.25 - Drop in China exports

China’s exports in October 2025 fell by 1.1% year-on-year – a sharp reversal from the 8.3% increase in September. The drop was driven especially by a plunge in shipments to the U.S., which fell by around 25% y/y. In the same period, Chinese imports also slowed markedly, growing only 1.0%, versus 7.4% in the prior month.

Exports of rare-earth elements however rose 9% in October (on a monthly basis) — notwithstanding the broader export slowdown.

Markets: Asian shares down this morning led by yesterday’s US sell-off

• Hang Seng: down 0.9%

• China mainland stock indices: down 0.5%

• China yields slightly down with 10-year yield around 1.75%

• CNY: unchanged

My View: The export contraction shows that China’s external demand cushion is fading. Earlier this year, the country benefited from front-loading ahead of US tariff hikes — that rush is now clearly over.

Nevertheless, Beijing retains significant fiscal capacity and can introduce new stimulus at any time. Domestic investors, returning to the market after heavy pandemic-era losses, are adding a layer of positive momentum and helping to stabilize sentiment.
Despite the near-term weakness, China continues to hold strong structural advantages: it remains an economy with higher growth potential, controls the world’s largest rare-earth resources, is deepening trade ties with Europe and Latin America, and still holds the largest stockpile of US Treasuries.

Any large-scale Treasury selling could trigger a sharp spike in US yields — as briefly seen during the volatile overnight session in April — reminding both markets and the White House how tightly global risks are interconnected. Washington is well aware of the importance of avoiding any trade war escalation with China, knowing that financial stability and diplomatic balance are closely linked.

The short-term slowdown does not change the long-term picture. China’s fiscal capacity and strategic leverage keep it a key player as the second largest economy in the world.
Therefore, the allocation in the ETFMandate portfolio remains substantial, still with the plan to add more exposure in case of a sharp drop.

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