Aug. 10, 2010, 8:46 a.m. EDT
China trade surplus widens to $28.7 billion on export surge
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) -- China's trade surplus in July widened to $28.7 billion from June's $20.02 billion, outpacing consensus forecasts by a third, as exports surged to a record for the month, Chinese customs authorities reported Tuesday.
Surveys of economists by Reuters and Dow Jones Newswires had projected the surplus at $19 billion and $19.6 billion, respectively.
July's monthly surplus, the highest since January 2009, brought China's cumulative surplus for the first seven months of the year to $83.93 billion.
Exports rose 38.1% to $145.5 billion, while imports grew a more muted 22.7% to $116.8 billion.
"Export strength is evidence of the continuing recovery in global demand," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.
He said the relatively soft import growth figures did not reflect underlying weakness in China's domestic economy.
"My inclination is to shrug off the import numbers as part of monthly volatility," he said.
The growth rate for exports was below June's 43.9% rise, but managed to beat an average forecast for a 35.5% climb tipped by Reuters, and the 36.3% increase expected by Dow Jones Newswires. The Dow Jones Newswires survey had expected imports to gain 30.2%.
Still, some strategists said it wasn't possible to draw conclusions from the July trade data. Of the $8.7 billion rise in the trade surplus from levels in June, only $2.8 billion can be traced to trade with the U.S. and the Euro zone, according to calculations by HSBC.
"The bulk of the July trade surplus came from [trade with] emerging markets countries," wrote HSBC economists headed by Hongbin Qu.
He noted China's January-to-July cumulative trade surplus was 21% less than year-earlier levels.
Yuan factor
July's trade data could see Beijing come under renewed pressure to allow its currency to appreciate at a faster pace.
Data due out later this week are likely to show a U.S. trade deficit of $40 billion for the month, according to RBC Capital Markets.
"This contrast in the trade position of the two most important economies in the world will likely increase the pressure from Washington for Beijing to allow further currency appreciation, particularly in the lead-up to midterm election in November," RBC Capital Markets strategist Brian Jackson wrote in a note.
The Chinese currency has weakened against the yen and the euro in recent weeks, suggesting that "Beijing has more scope to allow gains against the dollar while still maintaining overall competitiveness," Jackson said.
China's exports to the European Union accelerated, even as the yuan lost ground to the single currency, the data showed. Exports to the E.U. totaled $28.7 billion in July, up 5.4% from levels in June.
HSBC said the July figures could represent the high-water mark for the nation's trade surplus, even as export growth is expected to remain in the double-digit levels in coming months.
The weak pace of economic recovery outside Asia coupled with the base effect created by last year's pick up in autumn shipments means that China's export momentum is set to "soften gradually," said HSBC's Qu.
China trade surplus widens to $28.7 billion on export surge
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) -- China's trade surplus in July widened to $28.7 billion from June's $20.02 billion, outpacing consensus forecasts by a third, as exports surged to a record for the month, Chinese customs authorities reported Tuesday.
Surveys of economists by Reuters and Dow Jones Newswires had projected the surplus at $19 billion and $19.6 billion, respectively.
July's monthly surplus, the highest since January 2009, brought China's cumulative surplus for the first seven months of the year to $83.93 billion.
Exports rose 38.1% to $145.5 billion, while imports grew a more muted 22.7% to $116.8 billion.
"Export strength is evidence of the continuing recovery in global demand," said David Cohen, director of Asian economic forecasting at Action Economics in Singapore.
He said the relatively soft import growth figures did not reflect underlying weakness in China's domestic economy.
"My inclination is to shrug off the import numbers as part of monthly volatility," he said.
The growth rate for exports was below June's 43.9% rise, but managed to beat an average forecast for a 35.5% climb tipped by Reuters, and the 36.3% increase expected by Dow Jones Newswires. The Dow Jones Newswires survey had expected imports to gain 30.2%.
Still, some strategists said it wasn't possible to draw conclusions from the July trade data. Of the $8.7 billion rise in the trade surplus from levels in June, only $2.8 billion can be traced to trade with the U.S. and the Euro zone, according to calculations by HSBC.
"The bulk of the July trade surplus came from [trade with] emerging markets countries," wrote HSBC economists headed by Hongbin Qu.
He noted China's January-to-July cumulative trade surplus was 21% less than year-earlier levels.
Yuan factor
July's trade data could see Beijing come under renewed pressure to allow its currency to appreciate at a faster pace.
Data due out later this week are likely to show a U.S. trade deficit of $40 billion for the month, according to RBC Capital Markets.
"This contrast in the trade position of the two most important economies in the world will likely increase the pressure from Washington for Beijing to allow further currency appreciation, particularly in the lead-up to midterm election in November," RBC Capital Markets strategist Brian Jackson wrote in a note.
The Chinese currency has weakened against the yen and the euro in recent weeks, suggesting that "Beijing has more scope to allow gains against the dollar while still maintaining overall competitiveness," Jackson said.
China's exports to the European Union accelerated, even as the yuan lost ground to the single currency, the data showed. Exports to the E.U. totaled $28.7 billion in July, up 5.4% from levels in June.
HSBC said the July figures could represent the high-water mark for the nation's trade surplus, even as export growth is expected to remain in the double-digit levels in coming months.
The weak pace of economic recovery outside Asia coupled with the base effect created by last year's pick up in autumn shipments means that China's export momentum is set to "soften gradually," said HSBC's Qu.