SOURCE / ECONOMY
Nation’s trade picture improves unexpectedly
Some activity driven by corporate restocking
Published: Sep 08, 2016 11:13 PM

China recorded better-than-expected trade data in August, indicating a certain improvement in growth momentum, customs data showed on Thursday.

In August, China's total foreign trade increased 7.9 percent from the same period last year to 2.2 trillion yuan ($330 billion), compared with a 0.9 percent decline in July, data released by the General Administration of Customs (GAC) showed.

In yuan-denominated terms, exports reached 1.27 trillion yuan in August, up 5.9 percent from a year earlier, expanding from the 2.9 percent growth rate in July, while imports jumped 10.8 percent year-on-year to 925 billion yuan, according to official data. As a result, the trade surplus reached 346 billion yuan in August, down 5.1 percent year-on-year.

Meanwhile, in dollar-denominated terms, exports declined 2.8 percent year-on-year in August, compared with the 4.4 percent fall in July, while imports unexpectedly gained 1.5 percent from a year earlier, ending a 21-month streak of slides, resulting in a trade surplus of $52.05 billion, slightly down from July's $52.31 billion.

"Since April, growth continued in yuan-denominated exports, while the figure in dollar-denominated terms experienced continuous declines, which was mainly due to the devaluation of the renminbi against the US dollar and a basket of currencies," Huatai Securities said in a note sent to the Global Times on Thursday.

While August exports improved markedly from July, that didn't necessarily "reflect a significant improvement of external demand, as the rise in growth is minor compared to the fluctuation of the data and as this August had two more working days than last year," Nomura said in a note sent to the Global Times on Thursday.

As to the stronger-than-expected growth in imports, experts generally attributed it to a surge in commodity prices and stockpiling by some manufacturers in August.

"Holding low expectations about the economy, some enterprises that had maintained relatively low inventories for raw materials in recent months increased imports for restocking needs recently, which is consistent with China's (Purchasing Managers' Index) rebound in August," Huatai Securities said.

Nomura noted that the recent improvement in growth was also driven by post-flood construction and purchases, which will likely be more transient than long-lasting.

Nomura cited a breakdown of the import data, saying that the strong growth of imports of vehicles and parts was likely driven by post-flood purchases, as many cars were damaged during the flooding.

Imports of iron ore and oil also improved, suggesting domestic investment improved as well in August.