CN: Merchandise Trade Balance

Fri Jan 12 06:00:00 CST 2018

Consensus Actual Previous
Level [$] $37.9B $54.69B $40.21B
Exports-Y/Y [$] 10.0% 10.9% 12.3%
Imports-Y/Y [$] 15.0% 4.5% 17.7%
Level [Yuan] ¥361.98B ¥263.6B
Exports-Y/Y [Yuan] 7.4% 10.3%
Imports-Y/Y [Yuan] 0.9% 15.6%

China's trade surplus in US dollar terms widened from $40.21 billion in November to $54.69 billion in December, above the consensus forecast of $37.9 billion. Year-on-year growth in exports slowed from 12.3 percent in November to 10.9 percent in December, above the consensus forecast of 10.0 percent, while year-on-year growth in imports dropped from 17.7 percent to 4.5 percent, well below the consensus forecast of 15.0 percent.

Slower headline exports growth in December reflected a moderation in demand from major trading partners outside of the region. Exports to the United States grew 12.7 percent on the year in December, down from 14.3 percent in November, while year-on-year growth in exports to the European Union slowed from 13.2 percent to 12.7 percent. This was partly offset by stronger exports to Japan, up 14.9 percent on the year in December after growth of 9.4 percent in November.

In seasonally adjusted terms, Chinese exports rose 7.0 percent on the month in December after an increase of 7.4 percent in November. Seasonally adjusted imports, meanwhile, rose 3.4 percent on the month, rebounding from a drop of 5.5 percent previously.

For 2017 as a whole, China's trade surplus amounted to $422.51 billion, well below the $509.71 billion surplus recorded in 2016. Exports rose 7.9 percent on the year-to-date, while imports advanced 15.9 percent

In domestic currency terms, China's trade surplus widened from CNY263.6 billion in November to CNY361.98 billion in December. Exports grew 7.4 percent on the year in yuan terms in December, down from 10.3 percent in November, while year-on-year growth in imports in yuan terms slowed from 15.6 percent to 0.9 percent. For 2017 as a whole, China's trade surplus fell to CNY2.87 trillion from CNY3.35 trillion in 2016, while exports rose 10.8 percent and imports rose 18.7 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.