China trade surprise in detail

From ANZ:

China’s trade growth rebounded in July with exports gaining 5.1% y/y and imports surging 10.9%. While the positive growth can be attributed to the low base last year, we believe an improvement in liquidity access in the aftermath of June’s cash crunch may have restored trading activities, resulting in the upside surprise in today’s release.

Going forward, improving consumer confidence in the US and possibly Europe may help lift the external profile. In addition, Chinese authorities have introduced 12 measures to boost the trade sector. To some extent, this should help promoted trade in the following months. The simplification of documentation procedure may spur some financially-driven flows via trade channels.

Export growth surprised the market on the upside, gaining 5.1% y/y in July, up from -3.1% in June.

By destination, exports to the US grew 5.2% y/y, following a 5.4% contraction in June. Exports to the EU rose 2.8%, from -8.3% in the prior month. Exports to Hong Kong, ASEAN and Taiwan rose 2.3%, 21.3% and 8.7%, respectively.

Imports grew 10.9% y/y in July, also beating the market on the upside by a large margin, versus June’s -0.7%.

On a volume basis, iron ore imports jumped by 26.4% y/y in July, from 6.8% in June. Crude oil imports rose 19.6%, from 2.1%. Copper imports increased 12.0%, from 9.7%. Soybean imports rose 22.7%, slightly lower than the 23.3% in the prior month.

On a seasonally adjusted basis, exports decreased 1.2% m/m while imports fell 3.0%.

The trade surplus narrowed to USD17.8bn in July, from USD27.1 bn in June.