The Customs Administration said on Sunday that exports rose 7.2 percent in August from a year earlier and imports rose 7 percent, leaving the country with a trade surplus of $28.6 billion for the month.
The figures compared with market expectations in a Reuters poll of a rise of 6 percent in exports, an 11.3 percent rise in imports and a trade surplus of $20 billion.
“China’s August trade sustained the upward trend seen since July, in line with accelerating growth momentum and improving market sentiment, pointing to an upside bias in Q3 GDP growth,” ANZ economists Liu Li-Gang and Zhou Hao said in a note after the data.
After slowing in nine of the past 10 quarters, the world’s second-largest economy has shown signs of stabilisation, with surprisingly firm rebounds in trade in July and surveys in the last week showing manufacturing regaining momentum and growth in the services sector at a five-month high.
Investors had as recently as a month ago worried that China’s economy was slipping into a deeper-than-expected downturn, especially after its money market suffered an unprecedented cash crunch in June.
But policymakers have stepped in with measures to steady the economy, from quicker railway investment and public housing construction to introducing policies to help smaller companies with financing needs.
Attention now turns to other data for August due in the next two days, with investors looking to figures for industrial output, inflation, money supply and investment to further gauge the impact of those measures. Gross domestic product data for the third quarter is due in October.
A Reuters poll shows factory output is expected to have grown an annual 9.9 percent in August, matching the January/February figure as this year’s biggest increase, while investment should tick up and inflation stays muted.
ASEAN Trade Leads
The trade figures showed exports of electronics, textiles and machinery rose in the month. Exports toASEANnations jumped 30.8 percent in August, outpacing July’s gains, while exports to the U.S. rose 6.1 percent, faster than July’s 5.3 percent gains.
Exports to the European Union rose 2.5 percent, little changed from July’s gain, while exports to Japan contracted for the seventh straight month. For a table, see.
The figures should help the government’s push to reform and restructure the economy away from a dependence on credit, investment and exports for growth and towards one driven by consumers.
While Beijing had signalled a willingness to tolerate slower growth for the reform push, it needed a stabilising of the economy to sustain its efforts, which some had called into question amid the worries about a deeper-than-expected downturn.
But a sustained recovery is still not certain. Imports were below expectations, a reflection of caution among manufacturers about future demand.
“There is no doubt that the external demand is improving, especially in developed countries,” said Lu Zhengwei, chief economist at Industrial Bank in Shanghai.
“But we are still not optimistic about the outlook in H2. Emerging market economies are struggling even though advanced economies are on the mend. Many Chinese companies, such as steel firms, are exporting at losses.”
Other risk factors remain. Although China appears better positioned than other emerging economies to handle any tapering of U.S. monetary stimulus, a severe credit crunch in June was a reminder of pressures in the economy.
In addition, most Chinese firms still face high financing costs, in part due to Beijing’s campaign to curb shadow banking.
Slowing growth has also squeezed heavily indebted companies and provincial governments, raising concerns that China’s credit explosion since 2008 could be headed for meltdown. (Reuters)