You might have expected Chinese trade to falter in August given the temporary shutdown of the world’s third-busiest container port and the prospect of waning external demand as the Delta wave washes over the world, colliding with various “peak growth” narratives in developed nations, especially the US.
Instead, the country’s exports hit a record last month, data out Tuesday showed. Shipments were $294.3 billion, up 25.6% YoY (figure below), exceeding all estimates. The range, from 27 economists, was 12.5% to 24%.
Imports rose 33.1% from a year ago. That was easily better than the 27% the market expected and also came in near the top of the range.
The surplus was $58.34 billion, wider than the $53 billion estimate.
This came as welcome news for macro watchers and served as a boon to risk sentiment. Worries about a slowdown in China are top of mind, and Xi’s regulatory crackdown has exacerbated those concerns. The PBoC is generally expected to ease in the back half of the year, but some analysts doubt it’ll be enough.
Robust trade numbers out of Beijing suggest global growth perhaps isn’t decelerating as quickly as feared, although many flagged pull-forward ahead of the holiday shopping season and order diversion from Southeast Asian nations dealing with acute COVID outbreaks, as key factors. By value, electronics, high tech goods, and clothes were the top-three exports.
The latest activity data out of China missed across the board. The August figures will be highly scrutinized. PMIs for August showed services activity contracting for the first time since February 2020 (figure below).
“Port disruptions and signs of tapering demand have had limited impact on export momentum,” SocGen’s Michelle Lam and Wei Yao said Tuesday. “Given the logistics bottlenecks due to the shortage of container ships and port suspension, exporters have brought forward shipments for the coming [holiday] seasons,” they added, noting that “as EM countries continued to struggle with the Delta variant, China probably benefited from order redirection, too.”
For Lam, the shutdown at the Meishan terminal wasn’t the real concern in the first place. “[It] only accounts for 3% of Chinese port container throughput,” she remarked, before suggesting that what was “slightly surprising” in Tuesday’s data was “that exports held up despite signs of moderating consumer demand in the US.” Consumer sentiment stateside cratered last month.
Meanwhile, buybacks from Tencent and a purported dearth of fresh regulatory decrees helped Chinese tech stabilize. The beleaguered Hang Seng Tech gauge is now up 17% from last month’s nadir.
Of course, the decrees haven’t really stopped. There were more rumblings on Monday and on Tuesday, the Securities Times (it’s state-run, like everything else) suggested new regulations for algos might be coming. Quantitative trading “can’t be overlooked,” Beijing said.
Even if there wasn’t fresh news on the crackdown (and, again, there’s plenty), I’m not sure what it says about a market when the proximate cause for a good day is “a lack of more bad regulatory news,” as Bloomberg Intelligence put it.
