CN: Merchandise Trade Balance

Mon Aug 07 19:00:00 CDT 2017

Consensus Actual Previous
Level [$] $46.4B $46.74B $42.77B
Exports-Y/Y [$] 10.8% 7.2% 11.3%
Imports-Y/Y [$] 17.5% 11.0% 17.2%
Level [Yuan] ¥321.2B ¥294.3B
Exports-Y/Y [Yuan] 11.2% 17.3%
Imports-Y/Y [Yuan] 14.7% 23.1%

China's trade surplus in US dollar terms widened from $42.75 billion in June to $46.74 billion in July, close to the consensus forecast of $46.4 billion. Year-on-year growth in exports slowed from 11.3 percent in June to 7.2 percent in July, below the consensus forecast of 10.8 percent, while year-on-year growth in imports slowed from 17.2 percent to 11.0 percent, also below the consensus forecast of 17.5 percent.

The decline in year-on-year growth in China's exports in July relative to June was largely driven by weaker demand from the United States and the European Union, with recent gains in the domestic currency damaging the competitiveness of Chinese exporters. Exports to the United States rose by 8.5 percent in July, well down from 19.7 percent in June, while year-on-year growth in exports to the EU slowed from 15.1 percent to 9.5 percent. This was part offset by slightly stronger exports to Japan, up 6.6 percent on the year in July compared with 5.5 percent in June.

In seasonally adjusted terms, Chinese exports fell 1.1 percent on the month in July after an increase of 3.7 percent in June. Seasonally adjusted imports fell 0.9 percent on the month after a decline of 1.3 percent in June.

In year-to-date terms, China's trade surplus amounted to $231.68 billion for the first seven months of 2017, almost 25 percent below the $307.54 billion surplus recorded in the same period for 2016. Exports have risen 8.3 percent on the year-to-date, while imports have advanced 17.7 percent.

In domestic currency terms, China's trade surplus increased from CNY294.3 billion in June to CNY321.2 billion in July. Exports grew 11.2 percent on the year in yuan terms in July, down from 13.3 percent in June, while year-on-year growth in imports in yuan terms slowed from 23.1 percent to 14.7 percent.

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.