BEIJING, September 8 – China’s trade surplus surged to a record $49.8 billion in August, official data showed Monday, as imports saw a surprising fall and export growth slowed in a further sign of softness in the world’s second largest economy.
The mixed bag of data from the General Administration of Customs follows a string of figures showing continued weakness in the economy, fanning expectations the government will unveil new measures to boost growth.
Imports declined 2.4 percent year on year to $158.6 billion, Customs said, while exports increased 9.4 percent to $208.5 billion.
The drop in imports was more than July’s 1.6 percent fall and missed the median forecast of a 2.7 percent increase in a Wall Street Journal survey. And while overseas shipments beat estimates of 9.2 percent they were still well down from the 14.5 percent rise seen in the previous month.
As a result, the surplus beat the previous all time high of $47.3 billion set in July and easily passed the median forecast of $42 billion.
The news will do little to ease worries about the economy after a recent batch of disappointing data as a series of mini stimulus measures have failed to kickstart growth.
Last week two closely watched indexes indicated that expansion in manufacturing activity slowed in August. And in July, bank lending plunged while growth in key measurements such as industrial production, retail sales and fixed asset investment lost momentum from the previous month.
Analysts say China’s outlook is being damaged by trouble in its huge property sector — where new home prices in August saw their fourth consecutive month-on-month decline — and the waning effect of stimulus measures taken earlier this year.
“We expect the government to continue to roll out small, targeted easing measures to offset the ongoing property market correction,” Nomura economist Hua Changchun and colleagues said in a note reacting to the trade data.
– Worries over imports –
The continuing import decline “is another worrying sign of weak domestic demand”, they added.
In March the government set its 2014 growth target at about 7.5 percent, the same goal as last year. The economy grew 7.7 percent in 2013, matching 2012’s result which was the worst since 1999.
The weak performance in the first three months prompted authorities to introduce in April measures to boost growth, such as tax breaks for small enterprises, targeted infrastructure spending and lending incentives in rural areas and for small companies.
China’s property woes can be seen reflected in weak imports, said Julian Evans-Pritchard, China economist at Capital Economics.
“Slower import growth reflects cooling investment, particularly in the property sector, which has weighed on commodity demand,” he said in a note after Monday’s data.
“That said, the weakness in commodity imports has also been magnified by the sharp falls in commodity prices in recent months.”
Despite the slowdown from July, the August export figure can still be considered a bright spot, ANZ Bank economists Liu Li Gang and Zhou Hao said.
“China’s export growth slowed but still remained upbeat, reflecting continuously improving external demand,” they wrote in a report, citing improving appetite in the United States.
“China’s exports will likely remain elevated for the remainder of this year.”
But the Nomura economists cautioned that the outlook in overseas markets is precarious owing to concerns about Europe.
“External demand faces a high level of uncertainty, with European growth weakening and geopolitical risks,” they wrote.
Evans-Pritchard added that a combination of strong exports to developed markets and weak import demand at home means ongoing trade imbalances will likely push China’s currency higher.
“We expect China to continue to post large trade surpluses, which should put further upwards pressure on the renminbi,” he wrote of the currency, which is also known as the yuan.
China keeps a tight grip on the value of the currency and limits capital flows owing to fears they could disrupt the economy, but is also taking gradual steps increase its use internationally.