China Trade Balance


Exports remain strong in April amid suspicion of hot money inflows

In April, exports grew 14.7% over the same month last year, which was up from the 10.0% rise tallied in March. In addition, the increase exceeded the 9.2% rise expected by the markets. As a result of the monthly reading, in the 12 months up to April, exports grew 11.2% over the corresponding period last year (March: +10.4% year-on-year).

Analysts believe that the robust export figures seen in recent months could be mainly due to hot money inflows from overseas via murky transactions. In that respect, the State Administration of Foreign Exchange (SAFE) has started investigations on businesses, with severe mismatch between fund flows and reported trade payments. In addition, SAFE has introduced new regulation to limit banks' positions in foreign currencies.

Meanwhile, imports expanded 16.8% in April, which was well above the 14.1% rise seen in March. In addition, the print overshot the 13.0% increase anticipated by the market. As a result, imports expanded 6.0% in the 12 months up to April (March: +4.7% yoy).

The trade balance recorded a surplus of USD 18.2 billion, which was slightly below the USD 18.5 billion witnessed in the same month last year but above market expectations of a USD 16.2 billion surplus. Accordingly, the 12-month moving sum of the trade balance remained at March's USD 274 billion.

FocusEconomics panellists project merchandise exports will grow 10.1% in 2013 to USD 2.3 trillion, while the trade surplus will widen to USD 250 billion from USD 231 billion in 2012. For 2014, the panel expects export to increase 10.5%, while the trade surplus will shrink further to USD 236 billion.

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