The General Administration of Custom of China has published the latest set of trade figures, which show that the country recording the biggest trade deficits in many year.
The deficit amounted to US$31.483 billion, highest since 1989 according to Bloomberg. Exports amounted to US$114.471 billion, an increase of 18.4% compared to last year, well below market expectation of 31.1%, while imports grew strongly by 39.6% from last year to US$145.954 billion, above market expectation of 31.8% yoy growth. The year-to-date trade balance is now in deficit territory at US$4.42 billion.
On a seasonally adjusted basis, exports increased by 4% yoy, while imports increased by 9.4% yoy. On a month-on-month basis, exports decreased by 23.6%, while imports increased by 19.0%.
As you can see, the trade balance for the most recent first quarters have distorted to the downside partly due to the Chinese New Year. Similar to last year when China recorded a quarterly trade deficit of US$700 million in first quarter, I believe this will likely happen again this year. Here are the components:
The weaker than expected exports could reflect the underlying weakness of the global economy, particularly in Europe. The good news from this report, however, is that imports grew strongly, although most seems attributable to the timing of Chinese New Year holiday, which happened in January this year, but in February last year. We will need to see the data from the coming months to have a clear sense of what’s happening, free from the Chinese New Year distortion.