CN: Merchandise Trade Balance

Thu Apr 12 22:11:00 CDT 2018

Consensus Actual Previous Revised
Level [$] $27.0B $-4.98B $33.74B
Exports-Y/Y [$] 10.0% -2.7% 44.5%
Imports-Y/Y [$] 12.0% 14.4% 6.3%
Level [Yuan] ¥-29.78B ¥224.88B
Exports-Y/Y [Yuan] -9.8% 36.2% 35.2%
Imports-Y/Y [Yuan] 5.9% -0.2%

China's trade balance in US dollar terms shifted from a surplus of $33.74 billion in February to a deficit of $4.98 billion in March, falling well short of the consensus forecast for a surplus of $27.0 billion. Exports were significantly weaker than expected while imports were moderately stronger than expected. Export growth also weakened compared with the first two months of the year, as did imports growth, with the trade surplus for the three months to March well down compared with the equivalent period last year. On a bilateral basis, however, China's trade surplus with the United States in the first three months of the year is well above the level recorded for the same time last year, perhaps increasing the risk of trade tensions with the United States.

Exports fell 2.7 percent on the year in March, weaker than the consensus forecast of 10.0 percent, and well down on an increase of 44.5 percent in February and 24.4 percent year-to-date for the first two months of the year. Imports, meanwhile, increased by 14.4 percent on the year in March, above the consensus forecast of 12.0 percent and up from 6.3 percent in February but falling from 21.7 percent year-to-date for the first two months of the year. Looking at year-to-date data for January and February combined corrects for the impact of the timing of lunar new year holidays, which took place in mid-February this year but in late January in 2017.

China's trade surplus with the United States is $58.3 billion in the three months to March, around 17.7 percent higher than the $49.5 billion surplus recorded in the same period last year. Chinese exports to the United States are up 14.8 percent year-to-date, while imports from the United States are up 8.9 percent. Exports to and imports from the European Union are up 13.2 percent and 17.5 percent respectively year-to-date, while those to and from Japan are up 7.1 percent and 12.7 percent respectively year-to-date.

In seasonally adjusted terms, Chinese exports fell 14.8 percent on the month in march after an increase of 2.3 percent in February. Seasonally adjusted imports, meanwhile, rose 1.9 percent on the month after dropping 3.0 percent on the month.

In domestic currency terms, China's trade balance shifted from a surplus of CNY224.9 billion in February to a deficit of CNY29.78 billion in March. Exports fell 9.8 percent on the year in yuan terms in March after increasing by 33.2 percent in February, while year-on-year growth in imports in yuan terms picked up from a fall of 0.2 percent to an increase of 5.9 percent. Looking at the three months to March combined, exports rose 7.4 percent, while imports advanced 11.7 percent t. This resulted in a trade surplus of CNY326.18 billion for the three months, well down on the trade surplus of CNY454.7 billion recored in the first three months of 2017.

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.