China delivered another bumper trade report in February, logging a far larger trade surplus than markets had been expecting.
According to China’s General Administration of Customs, a trade surplus of $33.74 billion was recorded during the month, breezing past expectations for a far smaller surplus of $600 million.
Within the headline total, China’s trade surplus with the United States stood at $20.96 billion, slightly below the $21.895 billion level reported in January.
Chinese trade data is often volatile at this time each year given the shifting nature of Lunar New Year holidays.
Underlining that point, exports surged by 44.5% compared to one year earlier, easily beating economist forecasts for an increase of 13.6%. It was also stronger than the 11.1% increase reported in the 12 months to January.
“The low base last year and a falling yuan in February both contributed to the surge,” Yao Shaohua, an economist at ABCI Securities in Hong Kong, told Bloomberg.
Yao sees Chinese exports growing 3% this year but warned that “a trade war with the US will impose a drop”.
Like the export reading, the import data was equally volatile in February.
After surging 36.9% in the year to January, imports slowed to just 6.3% in February, marginally undershooting forecasts for a larger increase of 9.7%.
Providing a better overall indication of China’s trade performance in early 2018, exports grew by 24.4% in January and February from the same period a year earlier, suggesting that stronger economic conditions continues to support demand.
Imports grew 21.7% over the same period, reflective of not only stronger Chinese demand but also higher commodity prices.
From an economic perspective, there are a few gremlins in the trade report. However, given the large trade surpluses that China continues to run with the US, that may not be the case when it comes to geopolitics.
In 2017, China recorded a $275.81 billion trade surplus with the US as stronger economic conditions helped boost demand for Chinese exports.
It was the largest calendar year surplus between the two nations on record.
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