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THE WEEK AHEAD: Asia likely to be a key driver
BACK TO THE FUTURES: JPY bulls back away
Chinese Trade Balance climbed to a 3-month high, helped by the export market only contracting -1.8% vs the -10.9% print seen on the export market (trade balance = exports minus imports, sending the ratio higher as a result).
In nominal terms the export market rose to a 3-month high which will help trading partners such as Australian, New Zealand and ASEAN economies.
Looking at the longer term trends of the trade balance data shows the potential for their trade markets to have topped around 2013, with both imports and exports moving lower (in nominal terms) in an erratic fashion. This would partly explain the lower GDP seen since 2011 and will be a theme which will no doubt be closely monitored in the months ahead for any signs of a turnaround.
However, the % reads looks at the YoY% change and spells further weakness ahead for both the Chinese domestic markets and exports for key trade partners. Last month we highlighted the impressive % increase seen on the export market but also warned that it may be an outlier, having printed impressive numbers 1 year previously (then undergoing a 12-month downtrend). One month later we appear to be repeating the pattern of contracting imports and exports which, if continues, will weigh on both domestic growth and global sentiment.
Chinese imports and exports contract
Last month we highlighted the impressive rebound China's export market had displayed, whilst also observing the same had occurred 12-months prior before undergoing continue contraction. Data one month on suggests the pattern may repeat.