No worries from China’s trade data for September – a surge in imports telling us that the economy is doing well. Exports rose by less than expected, but instead of that generating the usual warnings of gloom, markets took that news in their stride.
The upshot was the smallest trade surplus in six months, dropping to $US28.5 billon, down $US13.5 billion from August to the lowest level since March and counter to market forecasts that it would fall to just over $US39 billion.
But the latest data also showed the largest nominal trade surplus with the US on record, based on figures dating back to 1993 which could be a worry if President Donald Trump gets out of bed on the wrong side one morning this week.
Exports rose 8.1% year on year in September to $US198.3 billion last month according data from China’s General Administration of Customs, up from the sluggish 5.5% rise in August. Imports though soared 18.7% to $US169.8 billion – up from August’s 13.3% rise.
The drivers were higher than expected imports of iron ore, coal, oil, copper and other commodities – there seems to have been a definite attempt by Chinese companies to stockpile ahead of the Golden Week holiday and the start of curbs on production from polluting industries in China’s north and northeast (around Beijing) from now until next March.
Imports of iron ore jumped 10.6% year on year to a record 102.8 million tonnes. The surge from 88 million tonnes imported in August came without impacting the world price – which fell by 9% in September. That saw iron ore imports for the nine months to September up 7.1% 817 million tonnes and well on track to end the year well above 1 billion tonnes.
Analysts say rise is due to demand from Chinese steel mills for higher-grade iron ore rather than buy cheaper and lower grade local ore. The same is happening in the coal sector.
In fact China’s coal imports in September rose to their highest level since December 2014 as Beijing’s safety and environmental crackdown across the country ahead of this week’s party congress curbed output at domestic miners.
Coal imports jumped nearly 11% to 27.08 million tonnes last month, from a year ago. They were also well up on the 25.27 million tonnes imported in August.
Imports for the first nine months of the year were up 13.7% to 204.85 million tonnes, reflecting strong appetite for the fuel despite the country’s effort to cut coal consumption amid its steadfast campaign against air pollution. They are on track to top the record 255 million tonnes imported in 2016.
China imported 9 million barrels of crude oil a day in September – up one million barrels from the 8 million for August this year and September, 2016, and above the 8.5 million barrels a day average for January to September.
China’s imports of copper and copper products climbed by 26.5% year-on-year in September, but still remain on course for an annual drop in 2017.
Shipments of unwrought copper, which includes anode, refined, and semi-finished copper products, reached 430,000 tonnes last month, equal to the figure for March and up 10% from August’s 390,000 tonnes. But imports for the first three quarters were 3.44 million tonnes, down 9.4% on the same period last year.
Meanwhile China’s politically sensitive trade surplus with the United States rose to a record for a single month, according to Reuters calculations using official data going back to 2008 (other reports said the largest since 1993). The surplus grew to $US28.08 billion from $US26.23 billion in August.
Exports to the United States rose 13.8% on-year from 8.4% in August and hit a record $US40.9 billion. China’s imports from North Korea fell 38% in September from a year earlier, the 7th consecutive month of decline, while exports dropped 6.7%. With the European Union, China’s exports rose 10.4% and imports 31%.
In its latest World Economic Outlook released last Tuesday, the IMF expected the Chinese economy to grow 6.8 percent this year and 6.5 percent next year, both 0.1 percentage point higher than its previous forecast in July. China’s third quarter GDP report is due out this Friday.
China’s economy expanded 6.9% in the first half of 2017, and economists expect a similar reading for the three months to September – perhaps 6.8% to 7%.
