Chinese economy continues to lift
China surprisingly reported a trade surplus in February. The data shows the Chinese economy continues to strengthen with exports leading the way.
What do the figures show?
- The Chinese trade surplus rose in February as exports outpaced imports. Exports rose 21.8 per cent in the year to February (forecasts +10.1%) while imports fell 15.2 per cent (forecast, down 8.8 per cent). The trade surplus was US$15.3 billion in February (forecast was for a deficit of $7.75 billion).
- Over the year to February the trade surplus was US$281.35 billion, the highest in almost four years (June 2009).
Why is the data important?
- China’s Customs Office releases trade data around the 10th of each month. China is the world’s second largest economy and Australia’s largest trading partner. Changes in the Chinese economy have major implications for the global and Aussie economy, exchange rates and interest rates.
What does it mean?
- Chinese factories keep on churning out products for the rest of the world. Clearly it shows that the Chinese economy is running at a solid pace and it also suggests that other global economies are performing better-than-expected because they are still buying Chinese products in healthy quantities.
- The timing of the Lunar New Year complicates analysis of the figures to some extent (sometimes it falls in January, sometimes February). But exports have beaten forecasts over both months. And over January and February exports are up 23.6 per cent on a year ago with imports up 5.1 per cent.
- The data is good news for Australian resource producers, because China needs commodities to churn out the finished goods. It also serves to support the Australian dollar at levels around US102 cents.