More on the China syndrome – TDS

FXStreet (Guatemala) – Analysts at TD Securities noted that China’s trade data showed the balance popping to a near record $60.2bn surplus in August, up from $43bn in July.

Key Quotes:

“A remarkable jump mostly due to a sharp slump in imports (-13.8% Y/Y vs consensus expectations of -7.9%), while exports did a little better than expected (-5.5% vs -6.6% consensus). It is hard to determine whether this result is a one off or a precursor to a sharper trend slowdown, but an improving trade surplus on a trend basis implies the existence of a natural offset to the slump in FX reserves.”

“The offset doesn’t come at zero cost though. A reduction of imports means that China is subtracting growth from the rest of the world, especially Asia, by an equivalent amount. So net exports may support better growth in China in the future (which should be risk positive), but only at the expenses of slower growth somewhere else (which is risk negative).”

“So whether you look at reserves or growth, or both, you will have to continue living with the fact that one way of another China has become a source of risk.”

Analysts at TD Securities noted that China’s trade data showed the balance popping to a near record $60.2bn surplus in August, up from $43bn in July.

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