China: Trade balance was much smaller than the market expectations - BBH

Research Team at BBH, suggests that the main news today has been China's trade balance where the $42 bln surplus was much smaller than the market had expected. 

Key Quotes

“The median forecast from the Bloomberg survey was $53 bln, which would have been a small increase from August's $52 bln surplus.  It is the smallest surplus since the Lunar New Year distortions that saw the trade surplus fall to $32.5 bln and $29.6 bln in February and March. 

Imports and exports were weaker than expected, and this plays on ideas that the Chinese economy is continuing to slow (though other data has shown it is stabilizing).  Exports fell 10% after falling 2.8% in August.  Some deterioration was expected, but only about a third of what was reported.  Imports fell 1.9% after rising 1.5% in August.  Of note, exports to the EU fell 9.8%, and exports to the UK fell 10.8%.  China may be more exposed to Brexit than generally perceived.  Exports to the US fell 8.1%.  Steel exports fell for the third month to stand at their lowest levels since February. 

Among imports, two products stand out.  First, as a new strategic reserve site went online, China's crude oil imports reached a new record high.  Second, China's copper imports fell for the sixth month to the lowest level since February 2015.  Demand slowed, and domestic output increased.  Domestic smelters increased output by 8.7% to a new record (5.5 mln tons) in the year through August.”