China January Trade Surplus Smaller than Expected


China's trade surplus narrowed sharply to USD 20.34 billion in January 2018 from USD 50.21 billion in the same month a year earlier and way below market consensus of USD 54.1 billion. It was the smallest trade surplus since a rare deficit in February 2017, mainly due to a jump in imports.

Imports jumped 36.9 percent from a year earlier to USD 180.2 billion in January, easily beating market expectations of a 9.8 percent advance and after 4.5 percent in December. Purchases of crude oil hit a record volume of 40.64 million tonnes, compared with 33.7 million tonnes in December, following China's decision to raise its 2018 crude oil import quota for the country's independent refiners by 55 percent over 2017. In addition, imports of iron ore went up 19 percent to 100 million tonnes, the second highest level on record, ahead of the lifting of steel production curbs next month; and purchases of coal rose to a four-year high of 27.81 million tonnes, compared with 22.74 million a month earlier, as heavy snow storms across the country boosted demand at utilities. On the other hand, China's unwrought copper imports fell for a second straight month to 440,000 tonnes in January from December's 450,000 tonnes. Also, imports of gas stood at 7.77 million tonnes, slightly below December's figure of 7.89 million tonnes; and imports of soybeans were at 8.48 million tonnes, down from 9.55 million tonnes in the preceding month.

Exports rose 11.1 percent to USD 200.5 billion, picking up from a 10.9 percent gain in December and also beating market consensus of 9.6 percent. However, Chinese steel exports fell by 18 percent from the previous month and by 37 percent from a year ago to 4.65 million tonnes, the lowest since February 2013.

The trade surplus with the US, China's largest export market, narrowed to USD 21.9 billion from 25.6 billion in December, as exports to the country rose 11.1 percent to USD 37.6 billion while imports grew 26.4 percent to USD 15.7 billion. Also, the trade surplus with the EU was USD 9.9 billion, with exports rising by 10.3 percent and imports by 44.6 percent; and that with ASEAN countries was USD 2.5 billion, as exports advanced 18.4 percent and imports 48.3 percent. Meanwhile, the biggest trade deficit was recorded with Taiwan (USD 10.5 billion, with exports increasing 25.4 percent and imports 41.6 percent), followed by South Korea (USD 8.2 billion, with exports increasing 9.2 percent and imports 28.6 percent), Australia (USD 5.4 billion, with exports increasing 0.1 percent and imports 11.7 percent) and Japan (USD 1.5 billion, with exports increasing 1.4 and imports 37.3 percent).

In yuan-denominated terms, the Chinese trade surplus shrank 59.7 percent from a year earlier to CNY 135.8 billion, as imports surged 30.2 percent to CNY 1.19 trillion while exports increased at a slower 6 percent to CNY 1.32 trillion.

Trade in January and February can be distorted by the Lunar New Year holiday, with business slowing down weeks ahead of time and companies scaling back operations. This year, the holiday falls on February 16th.


China January Trade Surplus Smaller than Expected


Rida Husna | rida@tradingeconomics.com
2/8/2018 8:18:59 AM