China: All-Time Record Trade Surplus

China had exports jump 9.4% year-over-year in August, much above the forecast of 8%.  However, the increase in August was less than the huge jump in July (14.5%).  Normally when exports are increasing strongly imports are also growing significantly since China imports a number of raw materials.  But imports fell in August by 2.4%, surpising analysts who had expected a modest increase.  The result was an all-time record trade surplus for any month:   ¥304 billion ($49.8 billion).

 

Sources were quoted by Reuters and Bloomberg expressing concern that the drop in imports might have occurred because of a significant slump in domestic demand in China.  That would align with the latest manufacturing PMI (Purchasing Managers' Index) numbers which were reported last week to have slumped in August.

As was the case last month there must be some concern about the validity of the export numbers.  From GEI News 08 August 2014:

Some analysts are discounting the surge in exports as a one-off event.  The logic of that argument is that the decline in imprts indicates a sluggish economy and is not what would be expected for exports entering a persistent period of strength.  Econintersect is reminded that in the first few months of 2013 export numbers were being padded with fake invoices.  These were being used as a means to provide conduits for "hot money".  Could something like that be happening again?

John Lounsbury

Sources:

• China's August imports fall unexpectedly but exports buoyant (Koh Gui Qing and Shao Xiaoyi, Reuters, 08 September 2014)

• China Posts Record Surplus as Exports-Imports Diverge (Xiaoqing Pi and Zhang Shidong, Bloomberg, 08 September 2014)

• China Balance of Trade (Trading Economics, 08 September 2014)

• China Manufacturing Loses Momentum, But Stays in Expansion (GEI News, 01 September 2014)

• China: Exports Shoot Up (GEI News, 08 August 2014)