China Trade Data
China Trade Data (Data released Saturday evening April 9, 2011)
- China reports a quarterly trade deficit of $1.02 billion, compared with the 1st quarter of 2010's $13.9 billion trade surplus
- The quarterly trade deficit is the first for China since Q1 2004
Comment - The People's Bank of China (PBOC) has faced extensive global pressure to appreciate the value of the currency. Although efforts have been made to value the yuan higher since last June, +4% in the past year, I expect this provides China's Premier Wen Jiabao the cover to slow the rate of appreciation. However, given the import and export numbers below, he cannot stop the appreciation altogether.
- Imports on a quarterly basis rose 32.6% or $400.7 billion, a quarterly record
- Imports in March rose 27.3%, above consensus estimates, to a record $152 billion
- Imports of crude oil, iron ore, copper, aluminum, steel, and soybeans all rose in March
- Imports from Germany rose 36% yoy; Russia 27.8% yoy; and South Africa 168.4% yoy - all above consensus estimates
- Exports in March rose 35.8% to $152 billion, above consensus estimates, slightly short of December 2010's record $154 billion
Comment - Strong import and export numbers highlight the strength of the Chinese economy. Continued monetary and fiscal measures to fight inflationary pressures are priority number one for the PBOC. Further raises in the Reserve Requirement Ratio (RRR) and interest rates should be expected throughout 2011. Soft Landing, Hard Landing, or No Landing - currently among the potential likely scenarios I rank Hard Landing as the least likely.