Chi­nese ex­port growth slows but im­ports pick up

Bangkok Post - - WORLD -

Chi­nese ex­ports grew slower than fore­cast in Au­gust, hit by weak global de­mand, but an­a­lysts say a jump in im­ports in­di­cated a pickup do­mes­ti­cally and point to a fur­ther im­prove­ment.

The fig­ures fol­low a run of broadly pos­i­tive read­ings in re­cent months, which have pro­vided some op­ti­mism in the world’s num­ber two econ­omy and key driver of global growth.

Ex­ports in­creased 5.5% year-on-year, the cus­toms ad­min­is­tra­tion said yes­ter­day, down from 7.2% in July and well off the 6% in a Bloomberg News sur­vey.

“There ap­pears to have been a broader de­cline in ex­ter­nal de­mand,” Ju­lian Evan­sPritchard of Cap­i­tal Eco­nomics said in a note. But he added that “fur­ther down­side to ex­port growth should be lim­ited by the fairly pos­i­tive out­look for China’s main trad­ing part­ners”.

Im­ports climbed 13.3%, beat­ing July’s 11% and the 10% fore­cast in the Bloomberg sur­vey. The trade sur­plus for the month came in at $42.0 bil­lion.

“Strong im­ports re­flect the mo­men­tum of do­mes­tic de­mand. It seems that third-quar­ter gross do­mes­tic prod­uct will see an up­side risk again,” Ray­mond Ye­ung, chief econ­o­mist for Greater China at Aus­tralia & New Zealand Bank­ing Group Ltd, told Bloomberg News.

Evans-Pritchard added that am­bi­tious Chi­nese pro­duc­ers en­cour­aged by higher in­dus­trial metal prices have con­trib­uted to surg­ing in­bound ship­ments of iron and cop­per ore.

The strong im­port fig­ures are likely to be wel­comed by the coun­try’s lead­ers who are try­ing to re­cal­i­brate its growth model from one driven by ex­ports and state in­vest­ment to one based on do­mes­tic con­sump­tion.

The trade data came a day af­ter the Peo­ple’s Bank of China an­nounced a rise in China’s for­eign ex­change re­serves, in­di­cat­ing the cen­tral bank would shift its pri­or­ity from curb­ing cap­i­tal out­flow to con­trol­ling yuan ap­pre­ci­a­tion, Evans-Pritchard said.

Ear­lier this year the yuan sank to al­most 7.0 to the dol­lar, a level not seen in al­most eight years — hit by cap­i­tal out­flows as the econ­omy strug­gled and traders bet on US rate hikes.

How­ever, it has en­joyed a resur­gence in re­cent weeks and is now at a 16-month high around 6.5 thanks to lower ex­pec­ta­tions the US Fed­eral Re­serve will lift in­ter­est rates again this year, tighter con­trols on cap­i­tal out­flows and im­prov­ing eco­nomic per­for­mance.

“The strong yuan is favourable to China if they want to buy more from the rest of the world,” Ye­ung said.

The Chi­nese econ­omy saw bet­ter-than-ex­pected growth in the first two quar­ters of the year thanks to debt-fu­elled in­vest­ment in in­fra­struc­ture and real es­tate al­though warn­ings of a po­ten­tial fi­nan­cial cri­sis have spurred Beijing to clamp down.

The long-term out­look re­mains clouded by geopo­lit­i­cal ten­sions linked to the North Korea nu­clear cri­sis as well as US Pres­i­dent Don­ald Trump’s anti-glob­al­i­sa­tion rhetoric and threats to slap China with tar­iffs.

China last month had halted im­ports of iron, iron ore and seafood from North Korea, whose lat­est nu­clear test last week­end met strong con­dem­na­tion from the emerg­ing BRICS na­tions dur­ing a sum­mit this week.

How­ever, yes­ter­day’s data show an 8.4% in­crease in ex­ports to the US last month. And while that lifted its con­tro­ver­sial trade sur­plus with the coun­try to $26.2 bil­lion, Betty Wang of ANZ re­search said in a note: “A broad-based trade war be­tween the two coun­tries is un­likely.”

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