Chinese trade data for July is out, and it’s missed to the downside.
According to China’s General Administration of Customs, exports fell by 4.4% in US dollar terms compared to the levels of a year earlier. Although an improvement on the 4.8% decline registered in June, the figure missed the median market forecast for a drop of 3%.
Over the first seven months of 2016, the value of exports fell by 7.4% compared to the same period a year earlier.
In yuan-denominated terms, exports rose by 2.9% compared to July 2015, underlining the effect of the weaker Chinese yuan seen over the past 12 months.
An official from China’s Customs Bureau stated that pressure on exports was likely to ease at the start of the December quarter.
Like the performance of exports, the import figure also underwhelmed.
Imports fell by 12.5% from the levels of a year earlier, well below the 7% contraction expected. It was also steeper than the 8.4% contraction seen in the 12 months to June, and was the largest year-on-year percentage decline since February this year.
Between January to July, the value of imports skidded by 10.5% compared to the same period in 2015.
Courtesy of the weaker yuan, in local currency terms, the value of imports fell by a smaller 5.7% over the past year.
As a result of the steep drop in imports, the trade surplus grew to $US52.31 billion, up from $US48.11 billion in June and forecasts for a decline to $US47.6 billion.
It was the largest surplus recorded since January this year.
There has been negligible market reaction to the news, suggesting that investors believe the weak July report merely increases the likelihood of further fiscal and monetary stimulus being implemented by Chinese policymakers.
Currency markets are unmoved while stocks across the region have maintained the strong gains seen before the trade report was released.
The one big mover has been Chinese bulk commodity futures which have rallied hard, continuing the move seen before the July trade report was released.
Rebar, iron ore and coking coal futures traded in Shanghai and Dalian are currently up 3.31%, 2.98% and 6.99% respectively.