China: Poor trade data may overstate underlying dynamics – ABN AMRO

According to Han de Jong, chief economist of ABN AMRO, Chinese trade data took a decisive turn for the worse in December as the value of Chinese imports in USD was down 7.6% yoy in December, the first negative number since mid-2016.

Key Quotes

“It must be borne in mind, this data is about values, so the drop in oil and other commodity prices plays a role here. There may also be base effects and currency effects. In addition, Chinese importers may have tried to beat tariffs imposed on US products, which may have boosted the numbers when that happened, but which inevitably leads to a drop when it is over. The point is, however, that such a drop is temporary and overstates the underlying dynamics.”

“Another point to make is that a big chunk of Chinese imports are inputs to export products. So any slowdown of exports will translate in slower imports and is not necessarily a reflection of slower growth of the domestic economy.”

“Regardless of all these qualifications, the December data was weak and must be at least partly reflection either of slowing growth in China or resulting from the trade war. It is probably a bit of both. Having said that, the longer I look at this data, the more I am inclined to think they must be exaggerating the downturn.”

“The growth rate of the value of imports has collapsed from +20.3% yoy in October to -7.6% in December. It simply is unlikely that actual activity would have fallen off a cliff in such a dramatic way. Therefore, I am inclined to think that there is at least a glimmer of hope. Given that so many commentators are currently pessimistic, I think chances of positive surprises are increasing rapidly.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD flirts with 1.1100 as the dollar loses steam

The EUR/USD pair bounced from a daily low of 1.1065, as demand for the greenback receded during US trading hours. Upside caped for the shared currency amid fears of a German recession, Italian political turmoil.


GBP/USD pressures recent highs amid renewed Brexit hopes

Comments from German Chancellor Merkel gave the Pound a lift, as somehow she hinted that the EU would consider an alternative to the Irish backstop.


USD/JPY slides to 106.30 area as US T-bond yields turn south

10-year US Treasury bond yield erases Monday's recovery gains. US Dollar Index preserves strength to limit pair's losses. Risk sentiment is likely to continue to drive pair's action.


Gold retreats from daily highs, continues to trade above $1,500

The XAU/USD pair took advantage of the risk-off flows earlier in the day and erased a large portion of the losses it suffered on Monday. After touching a daily high of $1,508.45, however, the precious metal lost its strength and edged lower toward the $1,500 handle. 

Gold News

Top 3 Price Prediction Bitcoin, Ripple, Ethereum: Planning the next bullish move after consolidating gains

Trading cryptos is not a one-way street – meteoric unstoppable gains belong to the past. Nevertheless, the bullish sentiment seems to prevail. Digital coins advanced on Monday and are consolidating on Tuesday. 

Read more