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Image: picture-alliance/dpa

China's trade data mixed

September 8, 2014

China's trade surplus surged to a record high in August, but domestic demand faltered as stimulus measures fizzled out and property market woes intensified, with real estate sales and prices continuing their decline.


China's imports in August fell 2.4 percent year-on-year, their worst performance in over 12 months and the second monthly decline in a row.

Meanwhile, August exports rose by 9.4 percent year-on-year. The rise was lower than the previous month's 14.5 percent, but the August figure still reflects buoyant demand from abroad.

The gap between exports and imports pushed the one-month trade surplus to a record high of $49.8 billion (38.5 billion euros).

While exports remained strong, domestic demand weakened. China's ailing property market, which accounts for about 15 percent of China's economic output, has been experiencing declines in sales and prices for the past two years.

"We expect the government to continue to roll out small, targeted easing measures to offset the ongoing property market correction," Nomura economist Hua Changchun and colleagues said in a note reacting to the trade data.

In March, the government set its 2014 growth target at 7.5 percent, the same goal as last year. The economy grew by 7.7 percent in 2013, matching 2012's result, which showed the lowest rate of growth since 1999.

Slower growth rates are normal as an economy matures. China's GDP in 2013 was about five times the size of its GDP in 1999, measured in purchasing-power parity, so 7.7 percent growth in 2013 represented five times as much increased production volume compared to the 7.6 percent growth in GDP achieved in 1999.

Nevertheless, worries early in 2014 that GDP growth might come in below the 7.5 percent target prompted authorities to introduce measures to boost growth, such as tax breaks for small firms, targeted infrastructure spending, and incentives to increase bank lending in rural areas and to small companies.

ng/nz (Reuters, AFP)

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