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10 Mar 2014
Flash: What to make of China's trade balance? - Westpac
FXStreet (Bali) - China’s merchandise trade position deteriorated sharply in February, on the back of resilient import growth and a collapse in export growth, notes Sean Callow, FX Strategist at Westpac.
Key Quotes
"The February balance is a deficit of $US23bn, a near $US50bn swing from January’s $US32bn surplus. That implies that the CNY depreciation seen through the month may have been in part a function of a dramatic turnaround in net real economy flows. Exports printed a startling -18.1% y/y (median +7.5%), imports a resilient 10.1% y/y (f/c 7.6%)."
"By market, exports hit a wall essentially across the board. Just as the uplift of January was broad based, so too was the February correction, a clear symptom of overbearing seasonality."
"Regarding imports, the iron ore exporters, Australia and Brazil, saw very sharp growth turnarounds, noting that volumes themselves were down by some 26mt in raw terms, a predictable follow up to the crazily high Jan inflow. The February inflation update looks extremely benign from the point of view of Chinese policymakers, who will feel that their 3.5% annual CPI target is unlikely to be threatened at any stage of the year."
Key Quotes
"The February balance is a deficit of $US23bn, a near $US50bn swing from January’s $US32bn surplus. That implies that the CNY depreciation seen through the month may have been in part a function of a dramatic turnaround in net real economy flows. Exports printed a startling -18.1% y/y (median +7.5%), imports a resilient 10.1% y/y (f/c 7.6%)."
"By market, exports hit a wall essentially across the board. Just as the uplift of January was broad based, so too was the February correction, a clear symptom of overbearing seasonality."
"Regarding imports, the iron ore exporters, Australia and Brazil, saw very sharp growth turnarounds, noting that volumes themselves were down by some 26mt in raw terms, a predictable follow up to the crazily high Jan inflow. The February inflation update looks extremely benign from the point of view of Chinese policymakers, who will feel that their 3.5% annual CPI target is unlikely to be threatened at any stage of the year."