2017.02.1001:30:00UTC+00China’s Exports Surge in January, Exceeding Expectations

China’s exports growth exceeded market expectations in January, expanding 7.9 percent in USD terms as compared with consensus expectations of a rise of 3.2 percent. In the previous month the exports had dropped 6.1 percent. Meanwhile, imports grew 16.7 percent, as compared with December’s rise of 3.1 percent and market projections of a growth of 10 percent.

The upside surprise in China’s January trade data is likely to have been partially because of the holiday effect. The Lunar New Year changes every year; however, it usually comes on the first two calendar months, resulting in volatility in China’s trade data for the period. The Lunar New Year period in 2017 began in late January.

The trade performance of China seems to have stabilized, in line with the rebound in the regional supply chain. The sharp rise in China’s exports in January ended the nine months of contraction. Meanwhile, the significant recovery in January’s imports was driven by commodity imports. Imports of iron ore and crude oil rose sharply by 85 percent and 72 percent year-on-year respectively, thanks to the rising commodity prices contributing more than half of total import growth in January, stated ANZ in a research report.

In volume terms, imports of iron ore also surged by 12 percent year-on-year in January following a temporary contraction in December. Import growth of crude oil expanded to 27.5 percent year-on-year from 9.6 percent prior. The low base last year might partially explain the solid recovery in imports, but it is also likely related to the still strong investment in the property market.

In the USD terms, China’s trade balance came in surplus at USD 51.4 billion, increasing from December’s surplus of USD 40.8 billion. Market expectations were for the trade surplus to widen to USD 48.5 billion.

“We remain concerned about the potential impact of the US trade policy on China-US bilateral trade going forward”, added ANZ.

Currently, it is still ambiguous how U.S. President Trump would like to shape U.S-China trade relations.

At 6:00 GMT the FxWirePro's Hourly Strength Index of Chinese yuan was neutral at -23.3315, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 106.824. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex