China: Trade surplus rises sharply in July
August 10, 2011
The trade surplus widened significantly and reached a 30-month high, as exports picked up in July. In July, exports rose 20.4% over the same month last year, which came in above the 17.9% increase in June and surprised the market on the upside, which had shipments climbing 17.0%. Imports advanced 22.9%, overshooting both the previous month's 19.3% increase and market expectations of a 22.0% expansion. The solid export growth was mainly due to rising purchases from the European Union and Japan, which drove the trade surplus to USD 31.5 billion in July, up from the USD 22.3 billion tallied in June and above the USD 27.4 billion expected by the market. The strong increase in exports defied recent manufacturing surveys, which had suggested a moderation in exports orders in the last four months. That said, the knock-on effects from the current situation in the United States and Europe is likely to dampen Chinese shipments going forward. In addition, the rising trade surplus will add more pressure on the RMB appreciation pace in the months ahead.