Yet again, Chinese trade data again has underwhelmed expectations – this time in September, although the strong rises for key imports like iron ore, crude oil and coal told us a different story.
So after a reasonable performance in August, exports were worse than forecast, along with imports. It was more of what we saw earlier in the year.
According to China’s Customs Bureau, the value of exports dropped 10% in the year to September in US dollar terms, making a mockery of forecasts for a 3% drop, and far worse than the 2.8% slide reported in August.
It was the steepest annual decline since January.
And imports, after rising in August (on year-on-year terms for the first time since October 2014) slipped back into negative territory, falling 1.9% from September last year.
That too missed forecasts for a 3% rise, and was a reversal from the 1.5% rise in August.
So largely as a result of the slide in exports, China’s trade surplus narrowed to $US41.99 billion, the smallest seen since March, and well under forecasts for a figure around $US53 billion.
Exports to EU fell 9.8%, the UK were down 10.8% and the US were off 8.1%.
And reflecting not only weaker commodity prices, also tepid external demand, and a weakening in the value of the Yuan, the value of exports for the 9 months to September fell 7.5% compared to the same period in 2015. And so far this year, the value of imports is down 8.2% compared to the same period in 2015.
According to well known Asian based economist, Julian Evans-Pritchard at Capital Economics;
“The data we have so far suggests that a drop in import volumes of a number of key commodities, including iron ore and copper, are partly responsible," he said.
“This could be an early sign that the recent recovery in economic activity is losing momentum, although we would caution against reading too much into a single data point given the volatility of the trade figures,” he wrote.
In the year to September, the Chinese yuan weakened by 5.5% against the US dollar, providing some explanation of the weakness in the export figures, but not all the 10% slide
Following the release of the data, a spokesman from the Customs Bureau said that the impact of currency movements were limited, according to Reuters.
The Bureau also said that China was facing “intensified” trade protectionism.
China’s exports in yuan-denominated terms fell 5.6% year on year in September, while imports rose 2.2%.
Foreign trade in the first three quarters was down 1.9% from a year earlier, with exports dropping 1.6% and imports off 2.3%. Later today, consumer and producer price inflation figures for September will be released.
That will be followed next week by retail sales, industrial output and urban fixed asset investment figures for September, along with the all-important Q3 GDP release, on Wednesday.
But the biggie will be the September month and nine month and quarterly figures on house prices out next Friday.
The housing boom and surging prices have seen a host of major cities reveal crack downs to try and prick what appears to e a bubble.
