China’s politically contentious trade surplus narrowed in September and resilient import growth showed that the economy remained a bright spot in a bleak global landscape.
But with the surplus still hefty and export growth also well into double-digit territory, there will likely be little easing in foreign calls for China to let its currency rise more quickly.
Beijing did what it could to cast the latest figures in a flattering light ahead of a US decision due tomorrow about whether to formally declare for the first time that China manipulates its currency.
In its release of the data, the General Administration of Customs noted that the trade surplus was at a five-month low and that month-on-month import growth hit a record high.
"Stronger-than-expected import growth shows that China's economy is increasingly relying on its internal strength, which is a result that Beijing wants to see," said Xu Jian, an economist with CICC in Beijing.
Import growth slowed to 24.1 per cent in September compared with a year earlier, well below a 35.2 per cent rise in August but ahead of market forecasts of a 23.7 per cent increase.
Annual export growth slowed to 25.1 per cent in September from 34.4 per cent in August, narrowly missing forecasts of a 25.5 per cent rise.
That left China with a trade surplus of $16.9 billion, still sizeable but down from $20.0 billion in August and below the median forecast of $18.0 billion.
There was enough in the data for people on all sides of the yuan debate to ensure that China's exchange rate policy will remain in the spotlight for now.
A G20 summit in Seoul in mid-November and U.S. Congressional midterm elections earlier that month are sensitive political dates, before which many analysts believe China will push through faster yuan appreciation to blunt foreign criticism.
The US House of Representatives last month passed a measure directed at China that could allow the United Sates to slap duties on imports from countries with exchange rates that are held at unfairly low levels.
A smaller Chinese trade surplus is seen as an essential component of rebalancing that is needed to put the global economy on sounder footing.
Reuters