China's 2017 trade boost shows shifting engines of growth

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"Although the trade data are often volatile, this latest decline (in import volumes) a sign that domestic demand may have weakened at the end of previous year", Capital Economics Senior China Economist Julian Evans-Pritchard wrote in a note.

China's 2017 trade surplus with the US was $275.81 billion, the country's customs data showed Friday, according to Reuters.

Imports grew an even slower pace of 4.5 percent year-on-year in December, the General Administration of Customs said, which was the weakest since they rose 3.1 percent in December 2016.

The trade surplus continued to narrow a year ago, shrinking 14.2 percent to 2.87 trillion yuan, compared with a 9.1-percent reduction registered in 2016 that saw 3.35 trillion yuan in trade surplus.

The politically volatile global trade surplus stood at US$422.5 billion, down from US$486 billion in 2016.

"Export prospects remain solid, given our outlook for growth globally, although more forceful US trade restrictions on China's exports remain a key risk, following another rise in the U.S.' bilateral trade deficit in 2017", he said.

The world's second-largest economy reported strong overall trade data for 2017.

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Economists estimated that China's import growth in December was entirely due to prices, with volumes down year-on-year.

As a result, the trade surplus rose to $54.69 billion in December, while it was forecast to fall to $37.4 billion.

China's goods surplus with the United States, a sore spot in relations between the two nations, hit a record high of $275.81-billion past year - topping the previous record in 2015 of $260.8-billion.

Solid global growth may provide some support for export growth, but, real effective exchange rate appreciation and an increase in USA protectionism could weigh on exports, narrowing the trade surplus further, according to securities trader Nomura.

U.S. President Donald Trump has repeatedly signaled tougher action on what he calls unfair practices that have lead to a massive trade deficit with China. His administration has slapped anti-dumping tariffs on a range of Chinese imports, such as aluminum and steel, and toughened its stance on Chinese investment in the U.S.

"We do not think that the import slowdown this year is going to be as sharp as suggested by the December data, given that China's policymakers continue to want to see credit and the economy cool gradually rather than fast", he said.