September China Imports Surge To Record, As Trade Surplus Drops, Misses Consensus
China released its September trade balance data, which at $16.9 billion, missed expectations of $17.8 billion, and was a sizable drop from the $20 billion in recorded in August, however was a 30.5% increase from a year ago. The reason for the sequential drop in the number was due to imports which at $128.1 billion surged to an all time high. This being China, of course, it was offset by a surge in exports to its two main export markets: the US and EU. US exports, much to the protectionists' chagrin, came at the second highest on record, or $27 billion, even as imports also grow marginally to $9 billion (see charts below). The the export saving grace was Europe, which imported $28.8 billion worth of Chinese goods, for a trade surplus (from the Chinese perspective) of $14.9 billion: the highest since the Lehman collapse. And confirming that September was a very much trade driven month, the gross notional trade balance with the Rest of the World (ex US and EU), surged to a record $99.7 billion ($44.1 billion in exports and $55.6 billion in imports, both at near or fresh record levels). The ongoing trade surplus will surely lead to more calls for Yuan revaluation, which of course simply means CNY-USD unpegging, as the CNY continues to benefit mostly to the Fed's ongoing devaluation of the dollar. How this is lost on our Congress critters and Senators is beyond us. Want CNY revaluation? Stop killing the dollar. And due to to traditional pick up in the trade surplus in the month of October, we expect screams for trade war to get ever louder next month once a fresh record Chinese export number is posted.
Some more observations on the trade deficit number from Bloomberg:
U.S. Treasury Secretary Timothy F. Geithner yesterday suggested that China’s yuan policy is distorting the global currency system by forcing other emerging market countries to intervene. Yuan forwards traded near a two-year high today on anticipation Premier Wen Jiabao will allow greater gains and signs the Federal Reserve may inject more U.S. stimulus, a move that could spur capital flows to Asia.
Today’s numbers are “unlikely to do much to reduce international pressure on China to move faster on the currency,” said Brian Jackson, an emerging-markets strategist at Royal Bank of Canada in Hong Kong. “Beijing has plenty of scope to allow appreciation in the months ahead.”
European and U.S. officials argue that a stronger Chinese currency would aid the global recovery by stoking demand within the nation and reducing international economic imbalances. China’s gross domestic product expanded 10.3 percent in the second quarter as the economy replaced Japan’s as the world’s second-biggest.
“What’s happening is, as China holds its currency down, their currencies are moving up,” Geithner said in an interview on “Charlie Rose” scheduled to air yesterday on PBS and today on Bloomberg Television, referring to other emerging markets’ exchange rates. Other nations “are having to work very hard to make sure they’re not at an unfair disadvantage with China.”
Actually - completely wrong! All China is doing is piggybacking, very prudently, on the US destruction of its own currency. After all there is that little thing called the USD peg. But we wouldn't expect Geithner to either understand the truth, or much less, present it to the peasants. After all it would be then confirmed that the main reason why US exporters are increasingly obsolete is not due to the Chinese monetary intervention, but that of the Chairman himself.
And here are some pretty charts showing the Chine trade surplus on a monthly basis:
Total monthly China trade balance:
Monthly trade balance by key export and import partners:
China trade balance with the US:
China trade balance with the EU:
China trade balance with the Rest of the World: