The Growth Rate Of Imports Rose Slightly, And The Trade Surplus Rebounded

In September's trade data, we need to pay attention to the following three points: First, the export growth rate unexpectedly declined in September, which was more disturbed by short-term factors (a higher base last year and the Mid Autumn Festival holiday). We cannot draw the conclusion that the prospect of foreign demand is deteriorating and will drag down China's economic growth. The growth prospects of the developed economies are improving, which is good for China, which has not yet secured a solid foundation for recovery. Second, we don't need to worry too much about export prospects, nor too much about import prospects. The steady and continuous replenishment of inventory and investment in fixed assets by enterprises means that China's economy will recover moderately, and imports reflecting the strength of domestic demand will also gradually recover. Third, the trade surplus rose and fell back in September, which does not mean that the financing will be tightened in the fourth quarter. The unexpected drop in export growth in September is more of a short-term disturbance, and the sharp rise and fall of trade surplus in September is also more of a short-term disturbance. The trade surplus in the fourth quarter (thus foreign exchange accounted for) will continue to recover, which will be conducive to the stability of new liquidity in the fourth quarter. Of course, the most important guarantee is to maintain the stability of money market funds, which is not only the intention of the central bank, but also the ability of the central bank.

Unexpected drop in export growth, no need to worry about the prospect of external demand

In September 2013, China's export fell 0.3% year on year, while the market had generally expected that the export growth rate would be 5.5% this month. This is the biggest "surprise" in this month's trade data. However, this month's unexpected drop in trade data was more disturbed by short-term factors. This short-term disturbance comes from two aspects: first, the impact of the higher base last year. In September last year, exports jumped by nearly 7 percentage points year on year, which partly explains the sharp drop in export growth in September this year. Second, the impact of the Mid Autumn Festival holiday. This year's Mid Autumn Festival falls in the middle of September, and last year's Mid Autumn Festival was on September 30. There are differences in the degree of interference to normal trade activities of enterprises.

From a country by country perspective, except for a slight increase in the growth rate of exports to Japan, the growth rate of exports to Europe, the United States and ASEAN all fell back. Among them, the export growth rate to ASEAN fell from 30.8% in August to 9.8% in September (Figure 2). In September last year, China's export growth to these countries or regions increased significantly, which further verified the impact of last year's high base. However, in terms of absolute value, the exports to these countries and regions in the third quarter still showed a steady upward trend compared with the second quarter. Therefore, we cannot conclude from the unexpected decline in export growth in September that the prospect of foreign demand has worsened and will drag down China's economic recovery.

In fact, the growth prospects of developed economies are improving. This was verified by the steady rise of OECD leading indicators in August. With the gradual easing of the US fiscal uncertainty (this is a high probability event from the current development), the twists and turns in the process of US economic recovery will be greatly reduced; The European economy has climbed out of the recession, and its recovery seems to have basically taken hold (especially, the capital market has regained confidence in the peripheral countries of the euro area); The effect of "Abenomics" is obvious, and Japan has become the fastest growing country among G7 countries. For China, whose current recovery foundation is not yet solid, the improvement of foreign demand prospects will be an unmistakable boost rather than a drag.

The growth rate of imports rose slightly, and the trade surplus rebounded

The year-on-year growth rate of imports in September rose slightly to 7.4% from 7.1% last month, indicating that China's economy is still growing moderately (Figure 3). We believe that China's imports will continue to grow steadily in the fourth quarter. This comes from the "stability and sustainability" of the domestic economy in two aspects: first, the stability and sustainability of enterprise inventory replenishment. In the PMI sub index in September, the inventory of finished products continued to decline, and the inventory of main raw materials turned upward. This combination of "one down and one up" is a sign that enterprises are more willing to replenish inventory. Second, the steady and continuous investment in fixed assets. From the perspective of historical experience, once the investment in infrastructure starts, the momentum will not stop. After all, it is a reflection of the government's policy layout; Considering that the recent economic recovery momentum is not steady, it should also be difficult for policy makers to tolerate the continuous serious decline of real estate investment. Therefore, even if there is a trend of differentiation in major types of investment, fixed asset investment will remain stable in the future. This will be a support for China's economy and correspondingly for China's imports.

In September, the trade surplus recorded US $15.2 billion, down from the high of US $28.5 billion last month. Then, does the trade surplus rise and fall in September mean that the capital will be tightened in the fourth quarter? We believe that the answer is no. If the unexpected decline of export growth in September is more of a short-term disturbance, then the sharp rise and fall of the trade surplus in September will certainly not become a worrying turning point. In the fourth quarter, the trade surplus will continue to grow in a restorative way, so will the foreign exchange funds.

In addition, the withdrawal volume of the Federal Reserve is wide, and the most turbulent period in emerging markets has passed, which is conducive to the stability of new liquidity in the fourth quarter. Of course, in the fourth quarter, the amount of funds due in the open market decreased sharply, which is a negative factor for future funds. But let's not forget that the central bank's control over short-term funds has become more routine and refined. Maintaining the stability of money market funds is not only the intention of the central bank, but also the ability of the central bank. The central bank, which controls the main gate of liquidity, is the biggest guarantee for the stability of the capital in the fourth quarter.