CN: Merchandise Trade Balance

January 13, 2017 06:00 CST

Consensus Actual Previous
Level [$] $45.8B $40.82B $44.61B
Exports-Y/Y [$] -3.5% -6.1% -4.3%
Imports-Y/Y [$] 3.5% 3.1% 2.3%
Level [Yuan] ¥275.4B ¥298.11B
Exports-Y/Y [Yuan] 0.6% 5.9%
Imports-Y/Y [Yuan] 10.8% 13.0%

China's trade surplus fell to $40.82 billion in December from $44.61 billion in November, somewhat below the consensus forecast of $45.8 billion. For the whole year, China recorded a trade surplus of $509.96 billion, 14.22 percent below the trade surplus of $594.50 billion in 2015.

Exports fell 6.1 percent year-on-year in December, a sharper fall than the consensus forecast for a fall of 3.5 percent, while imports rose 3.1 percent, below the consensus forecast of 3.5 percent. In seasonally adjusted terms, exports rose 8.5 percent month-on-month and 2.8 percent year-on-year in December, while imports rose 13.7 percent month-on-month and 14.9 percent year-on-year.

Exports to the United States rose 5.1 percent year-on-year in December after an increase of 6.9 percent in November, while those to the European Union fell 4.8 percent after a rise of 5.1 percent. Exports to Japan also fell year-on-year, down 5.6 percent in December after increasing by 3.2 percent in November.

In local currency terms, China's trade surplus fell from Y298 billion in November to Y275 billion in December. Exports rose 0.6 percent on the year, while imports rose 10.8 percent on the year.

The full 2016 data shows that China's trade position weakened over the year, with the fall in the annual trade surplus driven by a 7.7 percent drop in exports (in U.S. dollar terms), outstripping a 5.5 percent fall in imports. This impact on China's economy was offset to some extent by currency depreciation over the year, with exports only falling by 2.0 percent in yuan terms over 2016, while imports rose 0.6 percent.

Officials also appear concerned about the outlook for 2017, warning that there may not be a rebound in world trade this year. They argued that China would be hard hit by "anti-globalization" trends and said they would closely monitor the trade policies of the incoming Trump Administration. Consistent with previous comments that have stressed the need for China to shift away from low value-added manufacturing, officials today argued that China's traditional trade advantages are weakening and that more progress is needed to upgrade domestic industry towards high-tech production.

The Merchandise Trade Balance is the difference in value between imported and exported goods. Data are denominated both in U.S. dollars and renminbi. A positive number indicates a surplus meaning 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.