China’s trade surplus contracted sharply to USD$17.8 billion in August, down from $31.5 billion in July, as imports rose to a new record high, according to official data released yesterday, according to Gulf Daily News.
The trade surplus is a perennial point of contention for China’s key trade partners, the US and Europe, who seek better market access to the world’s second-biggest economy.
China’s August exports rose 24.5% year-on-year to $173.3bn, the customs agency said.
But imports jumped 30.2% to $155.5 billion in August, breaking the previously monthly record of $152.2 billion set in March.
China’s key commodity imports, including crude oil, copper and iron ore, all climbed in August from the previous month, adding to evidence that demand in world’s second-largest economy was still going strong despite the economic turmoil in the West.
The wave of buying of oil and industrial commodities suggests that Chinese companies remain confident about the domestic economy and that they would likely see any price corrections as a rare restocking opportunity – a move which should offer strong support to commodity prices.
With China’s inflation having pulled back in August from a three-year high, market watchers also expect the central bank to hold off further tightening measures, which could in turn ease the credit crunch and potentially draw producers and traders to import more raw materials.
China imported 21.04 million tonnes of crude oil in August, up 1.8% from the 20.66 million in the previous month.
Although implied oil demand in August slipped to the lowest rate this year, plant maintenance and accidents were the main reasons behind the dip and traders generally expect demand to improve from September.
“August-arrival crude cargoes were mostly loaded in June and July, when oil prices fluctuated a lot,” said a crude oil trader.
Data from the General Administration of Customs also showed China’s iron ore imports in August jumped 33% from a year ago to a five-month high of 59.09 million tonnes, thanks to the steel sector’s robust production.
However, analysts have cautioned that steel output could decelerate in the coming months amid a seasonal demand slowdown.
Despite slowing export growth due to the economic malaise in the US and Europe, China’s economy has continued to grow at an enviable clip of more than 9%, thanks in part to the government’s construction of more than 10 million houses as well as feverish investments in the less-developed mid and western provinces.
These factors have led Chinese mills to churn out near record amount of steel, cement plants to ramp up production and metal smelters to expand capacity – bolstering the country’s voracious appetite for a raft of commodities.
Imports of unwrought copper to China, the world’s No 1 consumer of the metal, posted a third monthly gain of 11% – the highest since March – to 340,398 tonnes in August, as buyers took advantage of lower prices overseas.
Compared to a year ago, however, copper imports remain down 10.3%, with year-to-date shipments down 20.5%.
China had kept on buying spot copper in recent weeks as arbitrage windows continued to surface, a trend which should support import numbers for September and October, said Jinrui Futures analyst Fu Bin.
Unwrought aluminium imports posted smaller monthly gains of 0.8%, but declined 2.3% from year ago. Amid the economic doom and gloom in the euro zone and US, investors have wondered if China, one of the top buyers, would be able to avoid a hard landing. Source: Gulf Daily News