China’s Trade Surplus Widens for Fifth Month as Imports Moderate

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China’s trade surplus widened for a fifth month in July as export growth remained solid and imports moderated, keeping the spotlight on a trade gap U.S. President Donald Trump aims to narrow.

Key Points

  • Exports rose 7.2 percent in U.S. dollars as imports increased 11 percent, both falling short of economist projections
  • The trade surplus widened to $46.7 billion
  • Shipments to the U.S. rose 8.9 percent versus 19.8 percent in June, narrowing the trade surplus with the world’s biggest economy slightly to $25.2 billion

Big Picture

Demand for Chinese products has remained resilient as growth in major trading partners continues to recover. At home, stronger-than-expected output is supporting robust import demand. Yet the world’s largest exporter confronts more uncertainty as U.S. President Donald Trump continues sporadic tough talk on trade. The White House may be considering a probe of alleged intellectual property violations, which could risk igniting trade tensions.

Read More: Trump Is Said to Wait on China Intellectual Property Probe

Economist Takeaways

“Overall exports and imports are still resilient,” Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong, said in a Bloomberg Television interview.

“The trend improvement in Chinese trade data – and more specifically in Chinese imports – appears to have peaked and is rolling over,” Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore, said in an email.

“Exports slowed in July, a reminder that despite robust demand the world’s factory has limited scope to grab increased market share,” Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a report. “If exports now come off the boil, that would provide additional reason for caution on deleveraging.”

“China’s trade surplus actually is heading downward if you look at a year-on-year comparison,” said Gai Xinzhe, an analyst at Bank of China’s Institute of International Finance in Beijing. “In the meantime, the July figures give China a little better position at the negotiation table with Trump. Clearly, China can say we have done much work to balance our trade relations, and here are the numbers.”

The Details

  • Crude imports fell the lowest in six months
  • Iron ore imports rose 7.5 percent on-year in the January-to-July period
  • Natural gas imports jumped 20.7 percent in the same period

— With assistance by Miao Han, Kevin Hamlin, Enda Curran, Yinan Zhao, and Xiaoqing Pi

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