There's One Bit Of Actual Good News This Morning...

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The one bit of actual good news this morning comes from China.It’s trade gap in August came in much narrower than expected amid booming demand.

Here’s Nomura’s comment:

China’s import and export growth both surprised on the upside in August. Because of a surge in imports, the trade surplus narrowed sharply to US$17.7bn from US$31.4bn. The strong rebound in nominal import growth reinforces most other activity data, suggesting that the economy is experiencing only a gentle slowdown. The details suggest that the rebound was not simply due to higher import prices. Indeed, the volume of iron ore imports rose by 32%, y-o-y in August, and import volumes of big-ticket items like cars and aeroplanes grew by 38% and 43%, respectively. We believe this strong domestic demand will help to support an economic soft landing in the coming months. New loans in August climbed to a higher-than-expected RMB548.5bn from RMB492.6bn in July. August M2 growth slowed to 13.5% from 14.7%. The decline of M2 growth appeared to have been largely driven by lower FX purchases by the PBOC in August, which were due to the narrowed trade surplus.

Heading into the year, a lot of people were fearful of a Chinese slowdown, and yet actually, while Europe and the US stumble, China hasn’t slown down that much. One global growth engine continues to rev.

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