CN: Merchandise Trade Balance

Mon Jan 12 20:00:00 CST 2015

Consensus Actual Previous
level $51.45B $49.6B $54.5B
Exports-Y/Y 6.0% 9.7% 4.7%
Imports-Y/Y -7.0% -2.4% -6.7%

December unadjusted merchandise trade surplus was $49.6 billion, down from $54.47 billion in November. Exports were up 9.7 percent on the year after increasing 4.7 percent in November. Imports slumped 2.4 percent after increasing 6.7 percent the month before. For 2014, the trade surplus jumped to $382.5 billion from $259.75 billion in 2013.

The rise in exports suggests the global economy picked up momentum last month, but the decline in imports indicates domestic demand is weakening. The fall in imports is consistent with last week's inflation report: it showed that China's producer price index deflated by 3.3 percent in annual terms, the most since September 2009, reflecting a drop in demand for raw materials.

On a seasonally adjusted basis, exports were up 1.2 percent on the month, down from November's 1.9 percent increase. On the year, exports were up 6.6 percent after rising 7.7 percent the month before. Imports edged up 0.2 percent on the month after sliding 6.9 percent in November. Imports dropped 6.2 percent on the year after slipping 2.2 percent in November.

Unadjusted exports to the U.S. were up 9.9 percent while imports were up 3.0 percent on the year. The surplus was up $15.81 billion from a year ago. In November, the surplus was $3.03 billion. In trade with the European Union, exports were up 4.9 percent while imports jumped 15.4 percent for a deficit of $11.45 billion on the year. In bilateral trade with Japan, exports dropped 7.2 percent on the year while imports slipped 0.1 percent. On the year, the surplus was $63.33 billion.

The merchandise trade balance is the difference in value between imported and exported goods. Data are denominated in U.S. dollars. A positive number indicates that more goods were exported than imported.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they also affect currency values in foreign exchange markets. However, the foreign exchange impact is muted here given that the currency is pegged to a basket of currencies and its value is determined daily by the government.

China's growth stems from its exports to the industrialized world. And in turn, global growth is dependent upon Chinese growth, especially since the financial woes of 2008.

Merchandise trade statistics are compiled and published by Customs General Administration (CGA) on a monthly basis. Preliminary estimates are available about 13 days after the reference month with details available within 25 days. Since 1980, the compilation of Customs statistics follows the concepts and definitions of the International Merchandise Trade Statistics: Concepts and Definitions. Data are released for total imports and exports in the Chinese currency and the U.S. dollar. There are five main categories each for primary and manufactured goods. Detailed information is available by category, destination country, foreign enterprises and domestic region to name a few. Geographically, the data covers the customs territory of the mainland China and excludes Hong Kong, Macao and Taiwan.