China's August imports beat forecast but exports softening

BEIJING • China posted stronger- than-expected import growth last month, reinforcing views that the world's second-largest economy is still expanding at a healthy pace despite tighter policy.

China's imports grew 13.3 per cent from a year ago, official data showed yesterday, accelerating from an 11.0 per cent pace in July.

Purchases of industrial commodities continued to lead the way as soaring steel prices boost Chinese mills' appetite for high-quality foreign iron ore to feed a year-long construction boom.

"The strong import data suggests that domestic demand may be more resilient than expected in the second half to less accommodative monetary policy," said Mr Louis Kuijs at Oxford Economics in a note, referring to a clampdown on riskier forms of lending which is pushing up borrowing costs.

Exports showed signs of softening, however, with growth cooling to 5.5 per cent from a year earlier, roughly in line with analysts' forecasts for a 6.0 per cent increase but down from 7.2 per cent in July.

Export growth was the slowest since shipments fell in February, but analysts do not foresee a protracted slowdown for the world's largest exporter as global demand still appears solid.

Global manufacturing activity also expanded strongly last month, adding to views that demand was holding up in the current quarter.

China's electronics exports, which tend to be higher-value and higher-margin goods, rose 7.4 per cent last month, while textile and apparel shipments fell by single digits.

A surging yuan could complicate China's trade picture in coming months. Policymakers are concerned exporters are under strain as the currency scales 21-month highs, insiders told Reuters.

But most analysts say the stronger currency has not had a big impact on exports as firms price orders based on longer-term currency trends. "The strength in the yuan is unlikely to change our optimistic view on China's near-term export outlook," ANZ senior China economist Betty Wang said in a note, arguing that China has a strong position in global supply chains. Nevertheless, some smaller Chinese exporters have complained of losses due to a sharp turnaround in the yuan, which has firmed nearly 7.8 per cent against the faltering US dollar so far this year.

The mixed performance left China with a trade surplus of US$41.99 billion for last month, the General Administration of Customs said, the lowest since May.

Analysts were expecting China's trade surplus to have widened to US$48.6 billion last month from July's US$46.73 billion.


A version of this article appeared in the print edition of The Straits Times on September 09, 2017, with the headline 'China's August imports beat forecast but exports softening'. Print Edition | Subscribe