CN: Merchandise Trade Balance

Fri Nov 06 18:00:00 CST 2015

Consensus Actual Previous
level $63.8B $61.64B $60.3B
Exports-Y/Y -3.7% -6.9% -3.7%
Imports-Y/Y -15.3% -18.8% -20.4%
Level (Yuan) ¥393.22B ¥376.2B

October merchandise trade surplus was $61.64 billion, up from September's $60.3 billion. Exports dropped for a fourth consecutive month, this time by 6.9 percent from a year ago after sliding 3.7 percent the month before. Imports also sank, down 18.8 percent on the year after plunging 20.4 percent in September. Imports retreated for a 12 straight month.

The report signals that the People's Bank of China is still struggling against economic headwinds even after cutting its main interest rate six times in the last year, most recently in October, and a surprise devaluation of the currency in August.

Exports to Japan slumped 9 percent in the first 10 months of the year from a year earlier, while those to European Union declined 3.7 percent. Shipments to Hong Kong dropped 11.7 percent during the same period. China's exports to the U.S., its largest trading partner, jumped 5.8 percent in the first 10 months from a year earlier, while those to the Association of Southeast Asian Nations increased 4.2 percent. Shipments to India rose 8.9 percent.

Imports from all 10 of the major trade partners listed by the customs administration declined in the first ten months.

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.