China: Trend in trade data does not paint as rosy a picture – NFB

Krishen Rangasamy, an analyst at National Bank of Canada, explains that China’s imports are falling, pushing the trade surplus higher, in large part due to trade war with US.

Key Quotes:

“China trade data for July came as a bit of a surprise. Exports were reportedly up 3.3% year-on-year, well above consensus which had been expecting a decline. But monthly trade data is notoriously choppy and hence it’s often wise to look at the trend to get a better idea of what’s really going on.”

“On a 12-month cumulative basis, China’s exports have largely stagnated at around US$2.5 trillion. The only reason China’s trade surplus is rising (US$ 414 bn in the 12 months to July) is because of slumping imports.”

“That’s largely due to the trade war which caused imports from the U.S. to fall at the fastest pace since 1987. Exports to the U.S. are also falling but at a slower pace. Clearly, the trend does not paint as rosy a picture as the monthly data for July.”