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Weaker Export & Import Growth Add To Growth Headwinds

CHINA DATA

China trade figures were weaker than expected from an export and import growth standpoint. Export growth printed at -14.5% y/y, versus -13.2% expected. Imports were -12.4% y/y, versus a -5.6% forecast. Export growth is back to early 2020 levels, while imports are trending back down, although remain above earlier 2023 lows (near -20% y/y). At face value the data suggests the economic backdrop remains a challenging one.

  • One positive from a CNH perspective is a largely than expected trade surplus for July, coming in at $80.6bn, versus $70bn forecast.
  • The reaction in USD/CNH has been fairly muted so far. We did spike a little higher, but now sit back closer to 7.2200. As we noted earlier, the extent to which the CNY NEER has already fallen in recent months has discounted a weaker export growth backdrop, see the first chart below.
  • Processing exports (with imported materials) continued to ease, down -22.1% y/y from -19.5% in June.

Fig 1: China Export Growth & CNY NEER Y/Y

Source: MNI - Market News/Bloomberg

  • On the import side, the weaker than expected result shouldn't add to the recovery in aggregate commodity prices in recent months (albeit still negative in y/y terms), see the second chart below.
  • Iron ore and oil imports were down in volume terms for July versus June, but still up in y/y terms, more so for oil. Coal import volumes were also down a touch in m/m terms, but like oil up comfortably versus levels from a year ago.

Fig 2: China Imports & Aggregate Commodity Prices Y/Y

Source: MNI - Market News/Bloomberg

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