China Trade Surplus Narrows More Than Estimated as Imports Climb to Record

China’s imports climbed to a record and exports grew more than expected last month, indicating resilience in the world’s second-biggest economy as the U.S. and European recoveries falter.

Inbound shipments jumped 30.2 percent from a year earlier to $155.6 billion, the customs bureau said on its website yesterday. That pace exceeded the estimates of all 29 economists in a Bloomberg News survey. Exports climbed a more-than-expected 24.5 percent, leaving a trade surplus of $17.76 billion.

The data suggest the world’s biggest exporter is weathering Europe’s debt crisis and weakening U.S. consumer sentiment. Group of Seven finance chiefs yesterday vowed to buoy slowing economic growth after global stocks slumped on concern that Greece may default and the risk that Congress may block President Barack Obama’s measures to create jobs.

China’s trade data were “better than expected considering the debt crisis and market turbulence,” Dong Tao, a Hong Kong- based economist with Credit Suisse AG, said after the announcement. “It seems that the real economy is doing better than the financial world.”

The strength in imports provides further evidence that Premier Wen Jiabao’s campaign to cool inflation without choking off growth is taking effect. A government report on Sept. 9 showed consumer-price gains eased in August from a three-year high. Investment in roads, factories and real-estate rose by a quarter in the first eight months of the year, holding above 25 percent for the sixth month.

Higher Lending

New local-currency loans rose in August to 548.5 billion yuan, rebounding from a 2011 low the previous month, and 545.2 billion yuan in the same period last year, People’s Bank of China data released today show. The figure was higher than 22 of the 26 estimates in a Bloomberg News survey.

M2, the broadest measure of money supply expanded 13.5 percent last month, the slowest pace in almost seven years, and compared with the 14.2 percent median estimate in a separate poll of 27 analysts.

Economists at Capital Economics and Standard Chartered say growth in the money supply is being distorted as savers shift funds out of deposit accounts into wealth management products that aren’t included in the data. Movements in fiscal deposits by the finance ministry are also affecting the data, they say.

New local-currency deposits totaled 696.2 billion yuan in August, 373.6 billion yuan less than the same period last year and compared with a decline of 668.7 billion yuan in July, central bank data show.

Higher Than Expected

August’s imports grew the most since January and compared with a median estimate of 21 percent in a Bloomberg survey. The gain in exports was higher than 27 out of 29 estimates in a separate poll. The value of outbound shipments was the second- highest on record, just shy of the $175 billion in July, customs data show.

The trade surplus was lower than every estimate in a Bloomberg survey of 28 economists. The median forecast was for $24.6 billion after a gap of $31.5 billion in July that was the highest in more than two years.

The data “suggest the economy is staying on track despite the global slowdown,” said Liu Li-gang, a Hong Kong-based economist with Australia & New Zealand Banking Group Ltd. “Accelerating imports indicates domestic demand is maintaining strong momentum and that the risks of a hard landing have decreased significantly.”

Slower Growth

China is the world’s biggest exporter and the largest contributor to global growth. Citigroup Inc. estimates that the nation’s expansion will slow to 8.4 percent in the fourth quarter from 9.6 percent in the first half. The bank forecasts the economy will expand 9 percent for the full year, five times the pace of the U.S. and euro area.

Imports from Japan rose 16.5 percent from a year earlier to $17.5 billion, the highest in five months, customs data showed, as shipments recovered after the earthquake and tsunami in March. Exports to the nation climbed 30 percent from a year earlier, the most since March.

Purchases from the European Union, China’s biggest trading partner, jumped 31.4 percent from a year earlier to $19.4 billion, the most since May, while exports to the bloc climbed 22.3 percent to $34 billion.

Shipments to the U.S., the second-largest export destination, climbed 12.5 percent from a year earlier to $30 billion, the biggest jump since April, while imports rose 16.6 percent to $10 billion. The trade surplus with the U.S. last month narrowed to $20 billion, the first decline in six months, according to Chinese data.

Recession Risks

Imports of crude oil rose in August to a three-month high, copper climbed to the highest since January and iron-ore purchases were the largest since March, customs data show.

The Organization for Economic Cooperation and Development cut its growth forecasts for the U.S. and Japan on Sept. 8, and estimated the German economy will shrink in the fourth quarter, highlighting the risks of a renewed global recession. Four central banks in Asia held off raising interest rates on Sept. 8 as their focus switched to sustaining economic expansion from cooling inflation.

‘With the uncertainties in the global economy and financial markets, we see a rising risk of further slowdowns in both domestic and external demand for China,” Daiwa Capital Markets said in an Aug. 23 note. Daiwa cut an estimate for the nation’s export growth next year to 10 percent from a previous forecast of 15 percent.

In a sign that global demand is waning, commerce on the Asia-to-Europe container-shipping route, the world’s second busiest, rose the least since 2009 in the second quarter, according to Container Trade Statistics Ltd., a company based in Woking, England.

JPMorgan Chase & Co. lowered its recommendation on China Merchants Holdings (International) Co., which owns stakes in Chinese ports, to “underweight” from “neutral” on Aug. 30, on the risk that global trade will slow.

--Victoria Ruan, Zheng Lifei. With assistance from Chua Baizhen and Huang Zhe in Beijing, Helen Sun, Jing Jin and Bonnie Cao in Shanghai and Ailing Tan in Singapore. Editors: Nerys Avery, Jim McDonald

To contact Bloomberg News staff on this story: Victoria Ruan in Beijing at +86-10-6649-7570 vruan1@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst in Hong Kong at ppanckhurst@bloomberg.net

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