China trade performance better than expected
Improved exports, a key driver of growth for China, are a positive sign for the world's second-largest economy, which has struggled since early this year, analysts said.
The trade surplus rose 8.3 per cent from the same month last year and also widened from $US17.8 billion in July, according to customs figures released on Sunday.
Analysts had forecast a trade surplus of $US20.4 billion, according to a survey of 11 economists by Dow Jones Newswires.
"The surplus is higher than expected thanks to strong exports. The figures are good and show an upward trend in China's trade," Liao Qun, an economist at Citic Bank International, said.
"China's export markets began to grow strong again as the US is back on track and Europe is stabilising," he said.
Exports rose 7.2 per cent year-on-year to $US190.7 billion last month, customs said in a statement on its website. Economists had forecast a 6 per cent annual rise in exports for August, Dow Jones Newswires said. In July, exports grew just 5.1 per cent on the year.
Besides weak demand, China's exports have also been hurt by appreciation in its yuan currency, which makes its products more expensive overseas, analysts say.
Separately, imports rose a weaker-than-expected 7 per cent to $US162.1 billion in August, less than the 11.7 per cent rise forecast by analysts. Weak imports could still be a sign of worry for the economy, signalling that domestic demand is faltering, analysts said.
"The import figure is lower than expected, indicating that the demand from the domestic market is not that strong," Ma Xiaoping, a Beijing economist for HSBC, said. "However, there is no need to worry too much, as the effect of stimulus policies revealed earlier this year and the rebound in domestic demand will take time to realise."
The market is watching for signs of recovery in China. China's economy expanded 7.7 per cent last year, the slowest growth since 1999.
In the final quarter of last year, growth accelerated to 7.9 per cent, but has slowed in successive quarters to 7.7 per cent in the first quarter and 7.5 per cent in the second quarter. But China's manufacturing activity strengthened last month to its highest level in 16 months, official figures showed, with the closely-watched purchasing managers' index rising to 51 from 50.3 in July.
Frequently Asked Questions about this Article…
China's trade surplus widened to US$28.6 billion, up 8.3% from the same month last year and larger than July's US$17.8 billion. Exports rose 7.2% year-on-year to US$190.7 billion, while imports increased 7.0% to US$162.1 billion.
The surplus widened mainly because exports were stronger than expected, supported by recovering overseas markets such as the US and stabilising Europe. Analysts cited robust export growth as the key upside versus forecasts.
Economists polled by Dow Jones had expected a trade surplus of about US$20.4 billion and forecast a 6% annual rise in exports and an 11.7% rise in imports. Actual data beat export expectations (7.2% growth) and the surplus, but imports rose only 7.0%, well below the import forecast.
Stronger exports are a positive sign for the world's second-largest economy and suggest external demand is improving, which can support GDP growth. For everyday investors, better export data can be a signal that China’s growth headwinds may be easing, though domestic demand still matters.
Weaker import growth (7.0% vs. an expected 11.7%) indicates domestic demand isn't as strong as hoped, which is a concern for the economy. However, analysts noted stimulus measures and a domestic rebound may take time to show up, so it isn’t necessarily a reason to panic.
An appreciating yuan makes Chinese goods relatively more expensive overseas, which can hurt export competitiveness. Investors should watch currency moves because a stronger yuan can weigh on export-driven companies and sectors.
China's manufacturing purchasing managers' index (PMI) rose to 51 from 50.3, its highest level in 16 months, indicating a pickup in manufacturing activity that complements the stronger export data.
Investors should watch monthly export and import figures, the trade surplus, currency movements (yuan), manufacturing PMI readings, and any updates on domestic stimulus measures—these indicators together give a clearer picture of China’s trade momentum and domestic demand recovery.
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