CN: Merchandise Trade Balance

Fri May 08 07:00:00 CDT 2015

Consensus Actual Previous
level $40.8B $34.13B $3.08B
Exports-Y/Y 1.6% -6.4% -15.0%
Imports-Y/Y -11.2% -16.2% -12.7%

April merchandise trade surplus was $34.13 billion. Both exports and imports were down from a year ago. Exports dropped 6.4 percent and imports sank 16.2 percent on the year. The data suggest that the first quarter's weakness cannot be fully attributed to Chinese New Year distortions and is actually the result of soft conditions at home and abroad. A strong real effective yuan exchange rate and a crackdown on fake trade invoicing also may have hurt exports.

The trade figures are the latest sign of weakness in China's economy. In the first quarter, China's gross domestic product expanded by 7 percent from a year earlier, its slowest pace in six years. And despite recent monetary easing, industrial profits are down, monthly factory prices have been falling for more than three years and the real-estate market continues to swoon.

The merchandise trade balance is the difference in value between imported and exported goods. A positive number indicates that more goods were exported than imported. The data are released in yuan but are converted to U.S. dollar terms.

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.