CommSec Research. China: Trade surplus but exports slide

From

China trade

  • China trade data: The trade surplus narrowed from US$44.61 billion to US$40.82 billion in December (forecast US$46.5 billion). Exports were down 6.1 per cent over the year (forecast: -3.5 per cent) while imports were up by 3.1 per cent (forecast: 2.7 per cent).
  • China 2016 calendar year trade surplus totalled $509.96 billion.
    The Chinese trade data has the potential to affect the Aussie dollar so may be important for exporters

What does it all mean?

  • The latest Chinese trade data could be classified as mixed. The slide in exports is disappointing. But the optimists would point to the better-than-expected import figures – a potential sign of healthier Chinese domestic growth. And overall a sizeable trade surplus remains part of the economic landscape. In fact over 2016 China recorded a cumulative trade surplus of just over $500 billion.
  • Importantly, the Chinese economy continues its process of transition. In effect, the Chinese economy is rebalancing – moving away from a dependence on manufacturing and exports to one more focussed on household spending – like economies such as Australia and the US. The good news is the rebalancing is progressing in a steady fashion. The risks to Chinese trade lie with the protectionist policies discussed by the incoming US Trump administration.
  • The focus shifts to the gamut of China data including retail sales, fixed asset investment and industrial production due out next Friday.
  • Aussie policymakers will be cautiously optimistic about the upbeat shift in sentiment across the global economy. Risks to global growth have somewhat eased over the past six months.
  • The healthier domestic Chinese growth story has supported the strength in commodity prices in recent months. And rightly the focus is likely to be on the shifts in the inflationary environment over the coming year. CommSec expects the Reserve Bank to remain on the interest rate sidelines over 2017.

What do the figures show?

Chinese trade data

  • The trade surplus narrowed from US$44.61 billion to US$40.82 billion in December. Exports were down 6.1 per cent over the year (forecast: -3.5 per cent) while imports were up by 3.1 per cent (forecast: 2.7 per cent).

What is the importance of the economic data?

  • China’s National Bureau of Statistics releases its monthly economic statistics around mid-month. Quarterly GDP data is released around the 16th of January, April, July and October. China’s Customs Office releases trade data, and the People’s Bank of China releases financial statistics, around the 10th of each month. China is Australia’s largest trading partner and changes in the Chinese economic have major implications for the Aussie economy.

You must be logged in to post or view comments.