China Reports Record Trade Surplus
Bloomberg
Aug 7, 2014
China’s trade surplus surged to a record in July as export growth unexpectedly accelerated and imports fell, suggesting global demand will help the government achieve its 2014 economic-expansion goal of about 7.5 percent.
Overseas shipments increased 14.5 percent from a year earlier, the Beijing-based customs administration said today, beating all estimates in a Bloomberg News survey that had a median projection of 7 percent. Imports dropped 1.6 percent, leaving a trade surplus of $47.3 billion, bigger than all analyst estimates.
Stronger sales of Chinese products abroad will reduce pressure on Premier Li Keqiang to expand stimulus in the second half to bolster a second-quarter acceleration in growth. The report contrasts with the International Monetary Fund’s estimate last month of a slowdown in the U.S. economy that accompanied a cut in its global growth outlook.
“Exports have become a particularly important factor supporting Premier Li’s 7.5 percent growth target,” said Dong Tao, chief regional economist for Asia excluding Japan at Credit Suisse Group AG in Hong Kong. “Exports may continue to grow at a double-digit rate, or at least close to double digits, in the coming months.”
The record high trade surplus in July and an anticipated improvement in trade will help to support a “steady yet small” appreciation in the yuan, Tao said.
The Shanghai Composite Index (MXAP) reversed losses after the report and was up 0.3 percent at the 11:30 a.m. local-time break. The MSCI Asia Pacific Index of stocks was down 1.4 percent at 12:48 p.m. in Tokyo and the yuan strengthened.
Record Surplus
The pickup in exports follows June’s 7.2 percent increase and compares with analysts’ estimates for gains ranging from 2.9 percent to 10 percent. The median projection for imports was a 2.6 percent increase, after a 5.5 percent jump in June, and the trade surplus was forecast at $27.4 billion, following $31.6 billion the previous month.
China’s trade surplus for the first seven months widened to $150.6 billion from $125.9 billion in the same period last year.
The trade surplus may partly reflect capital inflows, though there’s no clear evidence of that, Hua Changchun, China economist at Nomura Holdings Inc. in Hong Kong, said.
Part of the drop in imports may be attributable to falling commodity prices. Iron-ore imports in the first seven months of the year rose 18.1 percent by volume while the average price fell 14.5 percent, the customs administration said. Crude oil imports rose 7.2 percent by volume and the average price declined 1 percent, and the average price of soybeans dropped 3.9 percent while the volume jumped 20.2 percent.
Ten of 48 economists in a Bloomberg News survey had projected a decline in July imports.
Nomura’s Hua said the comparison base last year for imports was high, so today’s numbers don’t necessarily show worsening domestic demand.
China’s economy has entered the second half with a mixed picture of growth in factories and service industries. While an official index showed manufacturing expanded in July at the fastest pace in more than two years, a private gauge of services dropped to a record low, hurt by a real-estate slump.
Trade will rebound in the second half as incentives take effect and demand from developed nations increases, Shen Danyang, a Commerce Ministry spokesman, said in a briefing last month.
Geopolitical Risks
The IMF last month said the global economy will expand 3.4 percent in 2014, less than its 3.6 percent prediction in April. The report reflected a world rattled by geopolitical risks that have risen since April, including the potential for “sharply higher oil prices” because of recent Middle East unrest.
The fund lowered its U.S. growth forecast to 1.7 percent from 2.8 percent before the world’s largest economy reported second-quarter expansion at a 4 percent annual pace, exceeding analysts’ estimates.
The National Bureau of Statistics is scheduled to release July inflation data tomorrow and figures on industrial output, fixed-asset investment and retail sales next week. The central bank will publish credit and money-supply numbers by the middle of the month.
To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@bloomberg.net
To contact the editors responsible for this story: Chris Anstey at canstey@bloomberg.net Scott Lanman, Nerys Avery
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| Leaders of China and Russia have signed an agreement on energy. |
Aug 7, 2014
China’s trade surplus surged to a record in July as export growth unexpectedly accelerated and imports fell, suggesting global demand will help the government achieve its 2014 economic-expansion goal of about 7.5 percent.
Overseas shipments increased 14.5 percent from a year earlier, the Beijing-based customs administration said today, beating all estimates in a Bloomberg News survey that had a median projection of 7 percent. Imports dropped 1.6 percent, leaving a trade surplus of $47.3 billion, bigger than all analyst estimates.
Stronger sales of Chinese products abroad will reduce pressure on Premier Li Keqiang to expand stimulus in the second half to bolster a second-quarter acceleration in growth. The report contrasts with the International Monetary Fund’s estimate last month of a slowdown in the U.S. economy that accompanied a cut in its global growth outlook.
“Exports have become a particularly important factor supporting Premier Li’s 7.5 percent growth target,” said Dong Tao, chief regional economist for Asia excluding Japan at Credit Suisse Group AG in Hong Kong. “Exports may continue to grow at a double-digit rate, or at least close to double digits, in the coming months.”
The record high trade surplus in July and an anticipated improvement in trade will help to support a “steady yet small” appreciation in the yuan, Tao said.
The Shanghai Composite Index (MXAP) reversed losses after the report and was up 0.3 percent at the 11:30 a.m. local-time break. The MSCI Asia Pacific Index of stocks was down 1.4 percent at 12:48 p.m. in Tokyo and the yuan strengthened.
Record Surplus
The pickup in exports follows June’s 7.2 percent increase and compares with analysts’ estimates for gains ranging from 2.9 percent to 10 percent. The median projection for imports was a 2.6 percent increase, after a 5.5 percent jump in June, and the trade surplus was forecast at $27.4 billion, following $31.6 billion the previous month.
China’s trade surplus for the first seven months widened to $150.6 billion from $125.9 billion in the same period last year.
The trade surplus may partly reflect capital inflows, though there’s no clear evidence of that, Hua Changchun, China economist at Nomura Holdings Inc. in Hong Kong, said.
Part of the drop in imports may be attributable to falling commodity prices. Iron-ore imports in the first seven months of the year rose 18.1 percent by volume while the average price fell 14.5 percent, the customs administration said. Crude oil imports rose 7.2 percent by volume and the average price declined 1 percent, and the average price of soybeans dropped 3.9 percent while the volume jumped 20.2 percent.
Ten of 48 economists in a Bloomberg News survey had projected a decline in July imports.
Nomura’s Hua said the comparison base last year for imports was high, so today’s numbers don’t necessarily show worsening domestic demand.
China’s economy has entered the second half with a mixed picture of growth in factories and service industries. While an official index showed manufacturing expanded in July at the fastest pace in more than two years, a private gauge of services dropped to a record low, hurt by a real-estate slump.
Trade will rebound in the second half as incentives take effect and demand from developed nations increases, Shen Danyang, a Commerce Ministry spokesman, said in a briefing last month.
Geopolitical Risks
The IMF last month said the global economy will expand 3.4 percent in 2014, less than its 3.6 percent prediction in April. The report reflected a world rattled by geopolitical risks that have risen since April, including the potential for “sharply higher oil prices” because of recent Middle East unrest.
The fund lowered its U.S. growth forecast to 1.7 percent from 2.8 percent before the world’s largest economy reported second-quarter expansion at a 4 percent annual pace, exceeding analysts’ estimates.
The National Bureau of Statistics is scheduled to release July inflation data tomorrow and figures on industrial output, fixed-asset investment and retail sales next week. The central bank will publish credit and money-supply numbers by the middle of the month.
To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@bloomberg.net
To contact the editors responsible for this story: Chris Anstey at canstey@bloomberg.net Scott Lanman, Nerys Avery
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