China’s Eight Month Surplus Narrows as Imports Rise 22 Percent, Outpacing Exports
China’s goods trade grew 17.6 percent in the first eight months of the year to 34.78 trillion yuan, the customs administration said on Tuesday. Imports grew 22 percent and exports 14.6 percent.
The release states no surplus. Work it out from the two lines it does state and the gap is smaller than a year ago, not larger.
The gap between exports and imports is closing
| Eight months to August, trillion yuan | Value | Change on a year earlier |
|---|---|---|
| Total goods trade | 34.78 | up 17.6 percent |
| Exports | 20.17 | up 14.6 percent |
| Imports | 14.61 | up 22.0 percent |
From the customs administration’s release of 8 September. No balance is published. The difference between the export and import lines is 5.56 trillion yuan, on our calculation.
Reversing the growth rates puts last year’s eight month exports at 17.60 trillion and imports at 11.98 trillion, a gap of 5.62 trillion, on our calculation. This year’s gap is 5.56 trillion, so it has narrowed by roughly 60 billion yuan while both sides of the account grew by double digits.
August ran the same way. Total trade reached 4.65 trillion yuan, up 19.8 percent, with exports of 2.73 trillion up 18.6 percent and imports of 1.92 trillion up 21.7 percent, leaving a gap of 0.81 trillion on our calculation. Imports led exports by 7.4 percentage points over the eight months and by 3.1 points in August, on our calculation.
Mechanical and electrical products dominate both sides
Imports of mechanical and electrical products rose 31.6 percent to 6.21 trillion yuan, a pace 1.44 times the 22 percent growth of total imports on our calculation. On the export side the same category rose 21.9 percent to 12.91 trillion while labour intensive goods fell 0.6 percent to 2.74 trillion.
The concentration can be measured two ways. That category is 64 percent of all exports on our calculation. And of the roughly 2.57 trillion yuan by which exports grew against last year, about 2.32 trillion came from it, so roughly nine tenths of the entire export gain sits in one category. The traditional export bracket did not grow at all.
One commodity line runs against everything else. Crude oil imports fell 14.6 percent by volume to 321 million tonnes, a fall in physical quantity that no price movement can explain away. The coincidence of that figure with the export growth rate is exactly that; both are printed in the release.
Where the trade went
| Eight months to August | Trillion yuan | Change | Share of total trade |
|---|---|---|---|
| Belt and Road countries | 17.74 | up 15.9 percent | 51.0 percent |
| ASEAN | 5.95 | up 20.6 percent | 17.1 percent |
| European Union | 4.20 | up 8.1 percent | 12.1 percent |
| United States | 2.76 | up 1.3 percent | 7.9 percent |
Values and growth rates as published. Shares of the 34.78 trillion yuan total are on our calculation. Belt and Road overlaps the other three groupings and is not additive.
The United States is now under 8 percent of China’s trade and grew 1.3 percent, against ASEAN at more than twice that share growing 20.6 percent. ASEAN’s trade with China is 2.16 times the American figure on our calculation.
By customs regime, bonded logistics grew fastest at 42.3 percent to 6 trillion yuan and processing trade 26.4 percent to 6.75 trillion, both far ahead of general trade at 10.5 percent, which remains the bulk at 20.89 trillion. Private enterprises accounted for 19.79 trillion, up 17.6 percent, exactly the headline rate.
Why it matters: For China the change worth reading is in the composition rather than the headline rate. Imports are growing faster than exports, which narrows the reconstructed merchandise gap even while both sides expand at double digits, and mechanical and electrical products dominate the expansion on both sides of the account. For Gulf exporters the contrast is sharper still: total imports rose 22 percent while crude import volumes fell 14.6 percent.
Outlook: September data lands in mid October. Two lines decide whether this is a turn or a month: whether the import growth premium over exports holds above 7 points, which would narrow the gap further, and whether crude volumes extend the decline into a full nine months.
Sources: General Administration of Customs of the People’s Republic of China.
