JAKARTA (TheInsiderStories) - Chinese merchandise exports expanded by 7.9% in January in US dollar terms, according to data from the General Administration for Customs. IHS Global Insight China Economist Brian Jackson said that the growth rate is the fastest monthly expansion since February 2015.
In February 2016, Chinese merchandise exports contracted by 7.7% or a 15.2%
Followings are the key points:
- Chinese merchandise exports grew 7.9% in January in US dollar terms, according to data from the General Administration for Customs. The growth rate is the fastest monthly expansion since February 2015, and compares to a 2016 contraction of 7.7% or a 15.2% contraction one year ago.
- The improvement was overwhelmingly due to much slower contractions of exports to Hong Kong, and a swing into modest growth for exports to the European Union. Somewhat faster growth in exports to the US and somewhat slower contractions in exports to ASEAN played a much smaller role in the improvement.
- Of initially published products, most showed improved growth relative to the month prior, although a majority of the export improvement was due to mechanical and electrical product exports accelerating from -6.1% to 4.4% growth and high-tech products from -8.0% to 2.3% growth.
- Chinese merchandise imports expanded 16.1% in January in US dollar terms. That is the fastest monthly growth of imports since January 2013, and compares to a 5.5% contraction in 2016 or a 19.9% contraction one year ago.
- Imports from the European Union and Korea accelerated, while other major partners were mostly unchanged. Of initially published products, high-tech imports accounted for 30.1% of growth, crude oil for 26.6%, electrical products for 23.8%, and iron ore for 15.2%.
- China’s trade balance was USD51.3 billion in January. That compares to a monthly average of USD42.6 billion in 2016 or USD56.8 billion one year ago.
Outlook:
Chinese exports and imports have rebounded, in line with expectations. While both are slightly stronger than expected, this is likely due to seasonal variability from the shifting 7-day Spring Festival holiday, which started on 27 January. That said, we do generally expect fairly strong growth rates in both exports and imports in the coming year.
This is due to low base effects from the 2016 contractions, rising commodity prices that impact nominal imports and exports to varying degrees, and modestly improved demand abroad.
The more important takeaway is a weakening trade surplus relative to a year ago. This is unsurprising, but important to keep in mind as China continues to post positive trade growth rates throughout the year; the scale of the surplus is what ultimately determines trade’s overall contributions to GDP growth. One month does not make a trend, although our forecast for 2017 is for the merchandise trade surplus to rise by less than 1% due to faster import growth. (*)