China posted stronger-than-expected import growth in August, reinforcing views that the world’s second-largest economy is still expanding at a healthy pace despite tighter policy.
China’s imports grew 13.3 percent from a year earlier, official data showed on Friday, handily beating analysts’ forecast of 10 percent and accelerating from an 11.0 percent pace in July.
Purchases of industrial commodities continued to lead the way as soaring steel prices boost Chinese mills’ appetite for high-quality foreign iron ore to feed a year-long construction boom.
“The strong import data suggests that domestic demand may be more resilient than expected in the second half to less accommodative monetary policy,” said Louis Kuijs at Oxford Economics in a note, referring to a clampdown on riskier forms of lending which is pushing up borrowing costs.
Exports showed signs of softening, however, with growth cooling to 5.5 percent from a year earlier, roughly in line with analysts’ forecasts for a 6.0 percent increase but down from 7.2 percent in July.
Export growth was the slowest since shipments fell in February, but analysts don’t foresee a protracted slowdown for the world’s largest exporter as global demand still appears solid.
Germany’s BGA trade association now expects German exports to rise 5 percent in 2017, double its earlier forecast, Die Welt newspaper reported on Friday.
Global manufacturing activity also expanded strongly in August, adding to views that demand was holding up in the current quarter.
In addition, China has tended to lag export trends seen elsewhere in North Asia this year. Neighbouring South Korea last week reported robust shipments in August, though the rate of growth eased slightly from July.
China’s electronics exports, which tend to be higher-value and higher-margin goods, increased 7.4 percent in August, while textile and apparel shipments fell by the single digits.
BEIJING BEGINNING TO WORRY ABOUT STRONGER YUAN
A surging yuan could complicate China’s trade picture in coming months.
Policymakers are beginning to worry as exporters come under strain as the currency scales 21-month highs, insiders told Reuters.
But most analysts say the stronger currency has not yet had a big impact on exports as companies price orders based on longer-term currency trends.
“The strength in the yuan is unlikely to change our optimistic view on China’s near-term export outlook,” ANZ senior China economist Betty Wang wrote in a note, arguing that China has a strong position in global supply chains.
Nevertheless, some smaller Chinese exporters have started to complain of losses due to a sharp turnaround in the yuan CNY=CFXS, which has firmed nearly 7.8 percent against the faltering U.S. dollar so far this year.[CNY/]
Much of that surge has come in just the past few months, with the currency appreciating 2.1 percent in August alone.
The mixed performance left China with a trade surplus of $41.99 billion for August, the General Administration of Customs said, the lowest since May.
Analysts were expecting China’s trade surplus to have widened to $48.6 billion in August from July’s $46.73 billion (35.57 billion pounds)
