Behind the strong trade data from China hides a serious concern, says chief economist.
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China’s international trade positive surprises. Now, warn economists against putting too much in numbers.
– This looks good on paper, but underlying it is not good, says Harald Magnus Andreassen Swedbank to DN.
Exports from China increased by 15.3 percent in September compared to the same month last year, according to new figures. At the same time, imports seven percent higher, leading to a trade surplus of 31 billion dollars. Beforehand, the surplus was expected to 41 billion dollars, according to TDN Finans.
– The problem is that the import is much weaker than exports. In this respect shows handelstallene that China does worse, says Andreassen.
– Signs of weakness
China’s trade surplus as a share of value added (GDP) in the third quarter over four percent, according to the chief economist estimates.
– As a share of GDP, profits have risen considerably over the past few quarters. Short is good for growth in China that exported much. It is also here a sign of weakness in the Chinese economy, says Andreassen.
– China may not have to grow a lot by having a larger surpluses. It can not stand the rest of the world anyway. China’s surplus equals another’s loss. No one can imagine that the solution is to increase the surplus in the current account. This will cause permanent and severe ubalalanser in the world economy, he said.
Imports increased
Senior economist Knut A. Magnussen DNB Markets, in turn, to a surprisingly strong trend in imports damper fear that domestic demand is starting to slow up.
– Imports from Hong Kong increased a lot, but there was also significant growth in imports from the United States, Europe and the rest of Asia in September, says he a morning report from brokerage Monday.
Andreassen Swedbank does not see as much reason for optimism.
– The figures are somewhat affected by several trading days in September, says he continues:
– Looking at what really has happened, this is not impressive. It has in fact been no increase in imports into China over the past year and a half. There are two things that explain this. One is that a good deal of raw materials prices, such as ore price has fallen. However, it also revealed weaker growth within the demand, he claims.
Cheating with export figures
The Magunussen and Andreassen stressed that it was particularly exports to Hong Kong that pulled up.
– This means that the figures should be interpreted with caution, says Magnussen.
Also Andreassen points out that Chinese exporters still cheating “part” with export figures for Hong Kong. Extensive use of false invoices for Chinese exporters have long been a topic among market participants.
– The double and errors are reported, and this appears to have risen again, he claims.
In contrast,
Chinese Premier Li Keqiang is confident that the country’s growth will come in at around 7.5 percent, reported Bloomberg News before the weekend.
Nordea Markets writes in his morning report Monday that “surprisingly positive Chinese September trade balance” stands in contrast to the Fed’s concerns about weaker global growth, as evidenced by the minutes of the last monetary policy meeting.
– Exports rose far more than expected and imports rose sharply after the fall in last month. But the good numbers were not enough to encourage the market, according to the morning report.
– A wave of risk aversion drives sell-off in equities and the rise in traditionally safe securities, write brokerage.
There are new GDP figures from China next week.
– People are concerned for the fourth quarter and beyond. The trade balance of China today was better than expected there is too much negativity that makes up for this. Investors will look for more positive indicators before we see some progress, says strategist Ryan Huang in IG to Bloomberg News, writes TDN Finans.
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