Sept.11--CHINA's trade figures are not all doom and gloom, according to China Economist Julian Evans-Pritchard at London's Capital Economics Ltd, who says that the mainland's trade is healthier than headlines suggest, and even called China's trade "quite healthy" in recent volume terms.
"Trade growth weakened further last month but there are good reasons to think that the outlook is brighter than many believe," said Mr Evans-Pritchard.
Exports dropped 9.6 per cent in August compared to the same month last year in dollar terms, after contracting 8.3 per cent in July.
This was weaker than expected given that the Bloomberg's median was a decrease of 6.6 per cent. Import growth also missed expectations, falling from 8.1 per cent year on year in July to a fall of 17.3 per cent in August versus Bloomberg's forecast of a decline of 7.9 per cent.
According to Mr Evans-Pritchard, the apparent weakness is misleading. "For a start, the return to negative export growth over the last couple of months has more to do with what happened a year ago than the current health of exports -shipments strengthened markedly in the second half of 2014, resulting in a less flattering base for comparison, which has dragged down year-on-year growth.
"When looked at in seasonally adjusted level terms, today's data look less alarming and are still consistent with both exports and imports having partially recovered since the start of the year, when global trade was notably weak.
"Another problem is that the recent deepening of global commodity price deflation, which continued in August, is weighing on the headline trade figures, which do not take into account changes in import and export prices," he said.
"Finally, trade would likely have been stronger in August had it not been for temporary disruptions to industrial activity as a result of the Tianjin warehouse blast and factory closures ahead of last week's WWII Victory Day parade.
"Looking ahead, we think trade growth ought to recover over the coming quarters. The drag from the Tianjin blast and Victory parade disruptions ought to have mostly faded this month. Meanwhile, stronger growth in China's main trading partners ought to shore up exports while a pick-up in investment spending will boost imports.
"The drag on headline trade growth from falling prices should also moderate as a weaker base for comparison from the sharp fall in commodity prices late last year helps ease commodity price deflation," Mr Evans-Pritchard said.
(Source:shippingazette)