China’s Better-Than-Expected Trade Figures Indicate Cyclical Upturn

Chinese exports were higher by 7.1% in US dollar terms in August compared to a year ago, exceeding consensus. The results continue the positive momentum in July, when exports rose 5.1%.  
“The export growth reflects more constructive global demand,” reckons Louis Kuijs, Chief China Economist at Royal Bank of Scotland. “Economic growth in the developed countries bottomed out earlier this year and this has helped to trigger an upturn in global trade.” China’s exports to the US were up 6.1% in August while shipments to the European Union were up 2.5% in US dollar terms.
However, growth in imports was weaker than the consensus, rising only 7% in US dollar terms compared with the Bloomberg consensus of 11.3%. “On our estimates, this implies a sizeable (3.5%) decline in total imports in real terms in August,” reports Kuijs, who notes that processing imports are down 0.5% from a year ago.
But “normal imports” – goods and services used in China’s own economy – showed solid growth. “They grew 10.4% year-on-year in US dollar terms, in our calculations, suggesting double-digit growth in real terms and pointing to continued robust growth in demand and thus economic activity in China’s own economy.”

Data on August domestic activity on 10 September added more information on the apparent cyclical economic recovery in China. The National Bureau of Statitistics reported that factory production rose 10.4% in August from a year earlier, the fastest pace in 17 months


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