JAKARTA - IHS Global Insight China economist Brian Jackson provides latest update on China’s trade data, which rises to six-month high driven by faster contractions in manufacturing input imports. Followings are the key points:
Key points:
- Chinese exports contracted at only a marginally lower pace in July. Non-cumulative exports shrank 4.4% in US dollar terms, compared to a 4.9%decline a month ago. The pace of contraction moderated to the United States, European Union and ASEAN, but worsened to Hong Kong. Evidence of manufacturing export’s deflation continues: For example,integrated circuits volume rose 7% while the value fell 9.4%.
- China’s imports contracted at a faster pace in July. Non-cumulative imports contracted by 12.5%, compared to an8.4% drop in June. Imports contracted at a faster pace from the European Union, ASEAN, South Korea and Japan.
- China’s trade balance rose to a six-month high, with a trade surplus of USD52.3 billion compared to USD47.9 billion in June or USD41.9 billion one year prior. China’s average monthly trade surplus was USD49.5 billion in 2015. Most of the rise in the trade surplus was captured by the machinery and high tech manufacturing sectors, whose surplus increased by the largest increment since March 2016.
IHS Global Insight Views:
The latest trade data point to a bottom-line growth for China’s manufacturing sector. While still falling, exports will weigh on topline revenues; imports fell faster in manufacturing inputs. This means that at least the trade component of value added for machinery and high tech manufacturers likely rose in July, before making corrections for changes in prices. China releases inflation data on 9 August and industrial value added growth data on 12 August.
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