China’s trade accelerates as economy remains in high gear
Economy grows at healthy pace despite forecasts of eventual slowdown
China’s import and export growth accelerated in September, suggesting the world’s second-biggest economy is still expanding at a healthy pace despite widespread forecasts of an eventual slowdown.
The data also suggested further improvement in the global economy, with business activity and demand having picked up markedly this year in Europe and the United States. The upbeat readings will be welcome new for Beijing ahead of a twice-a-decade Communist Party Congress next week, at which president Xi Jinping is expected to tighten his grip on power and set out the government’s top political and economic priorities for the next five years.
Imports grew 18.7 per cent in September from a year earlier, beating analysts’ forecasts for a 13.5 per cent expansion and accelerating from 13.3 per cent in August, customs data showed on Friday. The gain was stronger than the most optimistic forecast in a Reuters analysts poll.
Exports rose 8.1 per cent, below forecasts of 8.8 per cent but the most in three months and handily beating August’s 5.5 per cent. “Growth momentum is still quite strong and better than our previous expectations,” ANZ senior China economist Betty Wang said.
Once again, China’s imports were led by industrial resources as a year-long construction boom shows no signs of flagging and factories kept humming, boosting demand for materials from steel to copper. Higher commodity prices greatly magnified the strength of the bounce, but volumes surged, too, pointing to still-solid underlying demand.
Iron ore imports rose to a record 103 million tonnes, from 88.7 million tonnes in August, according to Reuters calculations. Copper imports were the highest since March. That left the country with a trade surplus of $28.47 billion, less than the near $40 billion expected and down from around $42 billion in August. China’s foreign trade will likely grow at a double-digit pace this year if current conditions continue, the General Administration of Customs said.
In addition to pointing to buoyant demand, some of the surge in September imports may have been due to companies “front loading” supplies ahead of a week-long national holiday in early October, analysts said. Capital Economics’ China economist Julian Evans-Pritchard said the timing of the mid-Autumn festival this year also meant there were more working days last month than in September 2016, suggesting October figures should show a partial reversal. “Nonetheless, today?s figures suggest that not only has strong foreign demand continued to prop up manufacturing activity in China but domestic demand remains resilient, too,” Evans-Pritchard said.
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. The surplus grew to $28.08 billion from $26.23 billion in August. Exports to the United States grew 13.8 per cent on-year from 8.4 per cent in August and hit a record $40.9 billion. Import growth slowed to 15.5 per cent, from 18.1 percent.
That could aggravate president Donald Trump’s frequent complaints that the trade balance between the two nations hurts the US economy. Mr Trump in August authorised an inquiry into China’s alleged theft of intellectual property in the first direct trade measure by his administration against Beijing, but the move is not expected to prompt any near-term change. Commerce Secretary Wilbur Ross recently pressed China on the “need to rebalance bilateral trade and investment relations” and urged it to take “meaningful action” on trade issues.
China-US ties have also been strained by demands that Beijing do more to pressure North Korea over Pyongyang’s nuclear and missile programmes. China’s imports from North Korea fell 37.9 per cent in September from a year earlier, marking the 7th consecutive month of decline, while exports dropped 6.7 per cent. With the European Union, China’s exports rose 10.4 per cent and imports 30.9 per cent.