CN: Merchandise Trade Balance

Sat Mar 07 21:00:00 CST 2015

Consensus Actual Previous
level $5.5B $60.6B $60.03B
Exports-Y/Y 13.6% 48.3% -3.3%
Imports-Y/Y -10.0% -20.5% -19.9%

February's merchandise trade surplus was $60.62 billion, up from January's $660.03 billion. Exports soared 48.3 percent on the year while imports sank 20.8 percent, surpassing the 19.9 percent slide in January. This reversed January's 3.3 percent decline. The data were likely affected by the Lunar New Year holiday.

Analysts tend to look at the combined trade data for the two months to help smooth out distortions caused by the long Lunar New Year holiday, which fell in mid-February this year but in early February in 2014. The customs office said local exporters usually make concentrated shipments ahead of the new year, which may have distorted export figures for January and February. For the first two months of 2015, exports rose 15 percent from a year ago, while imports fell 20.2 percent.

The import decline was partly due to the sharp fall in prices for key commodities such as oil and metals. Crude-oil imports fell 46 percent in value but were up 11 percent in volume. Iron-ore imports showed a similar trend, losing 39 percent in value but gaining 11 percent in volume. Analysts expect that low commodities prices coupled with generally weak domestic demand should ensure further trade surpluses for China in the coming months.

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.