Improving trade unlikely to lift China’s Q3 growth, says ANZ

HONG KONG - China’s export growth picked up to 15.3% y/y in September, from 9.4% in the prior month, better than market expectations, reflecting improving demand from advanced economies, especially the US. Shipments to the US and the EU grew 15.3% y/y and 14.9% y/y in September, compared with 9.4% and 12.1% in August.

Notably, China’s exports to Hong Kong accelerated to 34.0% y/y in September, versus -2.1% in the prior month, coincident with the renewed RMB appreciation in the past few months. ANZ says this triggers concerns that speculative trade flows to ride on RMB appreciation could have re-emerged. “Thus, the trade development between Hong Kong and Mainland China needs to be closely monitored. “
Meanwhile, import growth surprisingly returned to positive territory in September, gaining 7.0% y/y from -2.4% in August. “While the stronger-than-expected imports appear to be somewhat inconsistent with sluggish domestic demand, it suggests that commodity traders could have taken advantage of low commodity prices in the past month,” ANZ says. “China’s iron ore imports accelerated to 13.5% y/y in September, versus 8.5% previously.”
However, China’s total trade grew only 3.3% y/y in the first three quarters of 2014, increasing the risk that China may miss its 2014 trade growth target of 7.5%. “Notably, China did not achieve the trade growth target of 8% in 2013 and 2012 as well,” ANZ says. www.live.anz.com (ATI).