China trade rebounds in July, shows signs of recovery

http://www.reuters.com/article/2013/08/08/us-china-economy-trade-idUSBRE97703K20130808

(Reuters) – Surprisingly firm rebounds in China’s exports and imports in July offered some hope that the world’s second-largest economy might be stabilizing after more than two years of slowing growth, although an imminent rebound still looks unlikely.

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Imports of crude oil and iron ore rebounded from multi-month lows to record highs last month as more raw materials were shipped in to rebuild depleted stocks, and soy bean purchases hit a record for the second straight month.

A steadying of the economy would be a relief to China’s leaders, who have scrambled to shore up growth since mid-year amid concerns a sharp slowdown could derail their attempts to reform the economy so it was driven more by consumption than debt-funded investment and manufacturing.

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Data from the Customs Administration showed exports rose 5.1 percent in July from a year ago, a smart turnaround from their first fall in 17 months in June. Analysts had expected a 3 percent rise.

Imports fared even better with a 10.9 percent jump from a year earlier, more than five times what analysts had forecast. The surprising strength in imports left China with a smaller-than-expected trade surplus of $17.8 billion.

“July seems to reflect a return to a ‘normal’, relatively uninspiring trend,” analysts from Moody’s said in a note.

“In other words, while the worst seems to be over, the upturn will be relatively flat.”

Indeed, exports in the three months ended July 31 posted the slowest annual increase since October 2009, a Reuters calculation showed.

Still, Asian stocks rebounded on the data and the Australian dollar leapt a third of a cent on hopes that Chinese demand may have found a floor.

China’s trade performance has whipsawed this year after data was first inflated by companies reporting fakes deals to disguise illicit cash transfers, and then subsequently deflated by the government as it quashed the fictitious transactions.

Analysts said the July data probably had minimal distortions, but some cautioned against concluding the upbeat performance was driven by an actual improvement in final demand.


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