China’s trade surplus surges 40% in August as imports plunge

China's foreign trade in August dropped 9.7% year-on-year, with exports falling 6.1% and imports plunging 14.3%, official data showed on Tuesday. The trade surplus jumped by 40%.

China's statistics authority on Monday lowered the country's growth rate for 2014 to 7.3% from its original estimate of 7.4%.

The revised gross domestic product (GDP) for 2014 came in at CNY¥63.61tn (US$10tn), down CNY¥32.4bn from the preliminary calculation figure that put the annual rate at 7.4%, the National Bureau of Statistics (NBS) said in a statement.

The slide in the value of imports in August partly reflects cheaper commodities but the fall of 14.3% (13.8% in US dollar terms) year-on-year in renminbi terms in August, compared with July’s 8.6% dip — the 10th straight fall and the worst performance  since May.

The dip in exports of 6.1% (5.5% in US dollar terms) from a year ago, compares with an 8.9% decline in July. As a result, the trade surplus climbed almost 40% month-on-month to CNY¥368bn ($57.8bn), near the record CNY¥370bn record set in February.

“Exports to the US and the Association of South-East Asian Nations (ASEAN) continued to grow but shipments to the EU and Japan declined,” the Bureau of Customs said in a statement.

Julian Evans-Pritchard of Capital Economics said the outlook was “brighter than many believe.”

“The deeper contractions in headline trade growth will undoubtedly be viewed by some as further evidence of a deteriorating economic outlook for China,” he said in a comment. “But we think the apparent weakness is misleading,” he added, citing a high comparative base from last year for exports; commodity price deflation weighing on imports coupled with the recent massive explosion at the busy Tianjin port and government enforced factory shutdowns in the run-up to a huge military parade in Beijing last week

“Trade growth ought to recover over the coming quarters,” he said.

However, the Financial Times says China’s apparent demand for key commodities such as crude oil and iron ore fell in August compared with July, while imports of copper — considered a leading indicator for economic growth — were flat.

"In volume terms, which measures actual demand from China rather than global prices, crude oil imports are up 10% in the year to date while iron ore imports are flat. But August imports were not so rosy, with iron ore import volumes down 14% from July while crude import volumes fell 13%," it reported.

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Pic above: Xinhua, China's official news agency provides a caption: "A grand ceremony marking the 50th anniversary of the founding of the Tibet Autonomous Region is held at the square of the Potala Palace in Lhasa, capital of southwest China's Tibet Autonomous Region, 8 Sept, 2015."

China claims that Tibet has been part of China since the thirteenth century under the Yuan dynasty. According to Jayshree Bajoria of the US Council on Foreign Relations in 2008, "Tibetan nationalists and their supporters counter that the Chinese Empire at that time was either a Mongol (in Chinese, Yuan) empire or a Manchu (Qing) one, which happened to include China too, and that Tibet was a protectorate, wherein Tibetans offered spiritual guidance to emperors in return for political protection. When British attempts to open relations with Tibet culminated in the 1903-04 invasion and conquest of Lhasa, Qing-ruled China, which considered Tibet politically subordinate, countered with attempts to increase control over Tibet's administration. But in 1913, a year after the Qing dynasty collapsed, Tibet declared independence and all Chinese officials and residents in Lhasa were expelled by the Tibetan government. Tibet thenceforth functioned as a de facto independent nation until the Chinese army invaded its eastern borders in 1950."