China’s trade surplus surged to a record US$49.8 billion in August, official data showed on Monday (Sep 8), as imports surprisingly fell for a second straight month while export growth slowed.
Imports fell 2.4 per cent year-on-year to US$158.6 billion, the General Administration of Customs announced, while exports increased 9.4 per cent to US$208.5 billion. Imports, which had declined 1.6 per cent in July, worsened further in August and failed to match the median forecast of a 2.7 per cent increase in a Wall Street Journal survey of 15 economists.
Export growth slowed from July’s gain of 14.5 per cent, but beat the median expectation of a gain of 9.2 per cent. The surplus, meanwhile, bested the previous all-time high of US$47.3 billion recorded last month. It also exceeded the median forecast of US$42 billion.
The results came on the heels of data showing softness in China’s economy during the current third quarter, leading economists to stress that authorities will likely take further steps to boost growth. Growth in manufacturing activity slowed in August, two closely watched surveys showed last week. In July, China’s bank lending plunged and growth in key indicators such as industrial production, retail sales and fixed asset investment slowed from the previous month.
Analysts say that China’s growth outlook is being weighed down by trouble in the country’s huge property sector – where new home prices in August posted their fourth consecutive month-on-month decline – and the waning effect of stimulus measures taken earlier this year to juice growth. “We expect the government to continue to roll out small, targeted easing measures to offset the ongoing property market correction,” Nomura economists said in a note reacting to the trade data.
China’s economy expanded a stronger-than-expected annualised 7.5 per cent in the April to June quarter, picking up from 7.4 per cent during January to April, which had been the worst since a similar expansion in July to September 2012.
The weak performance in the first quarter this year prompted authorities from April to begin introducing measures to boost economic growth through steps such as tax breaks for small enterprises, targeted infrastructure spending and lending incentives in rural areas and for small companies.
China’s property woes can be seen reflected in the past two months of weak imports, said Julian Evans-Pritchard, China economist at Capital Economics. “Slower import growth reflects cooling investment, particularly in the property sector, which has weighed on commodity demand,” he said in a note after the trade data release. “That said, the weakness in commodity imports has also been magnified by the sharp falls in commodity prices in recent months.”
Highlighting China’s importance as a global growth engine, the August trade data came as Japan announced earlier Monday that its economy, the world’s third largest, shrank a revised 7.1 per cent on an annualised basis in the April to June quarter – larger than earlier reported – after a sales tax increase dented consumer spending.
China in March set its annual growth target for 2014 at about 7.5 per cent, the same objective as last year. The economy grew 7.7 per cent in 2013, matching 2012’s result which was the worst since 1999.
Source : Channel News Asia | September 8, 2014