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September 22, 2017

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China August trade surplus widens to nearly US$27 bil.

BEIJING -- China's trade surplus widened to US$26.7 billion in August as imports registered a surprise fall, data showed Monday, adding to expectations of a new round of stimulus measures.

The figures highlight waning strength in the world's second-largest economy, as the broader global slowdown and the European debt crisis dragged on exports which remained weak.

Exports increased 2.7 percent in August year-on-year to US$178 billion, the General Administration of Customs said in a statement on its website. Imports fell 2.6 percent to US$151.3 billion.

The increase in exports in August outpaced the one percent gain registered in July and was also slightly better than the 2.5-percent increase forecast in a survey of economists by Dow Jones Newswires, though is far below the kind of export growth China has experienced in recent years.

The decline in imports, meanwhile, came as those economists had expected a 3.4-percent rise and follows two straight months of slowing growth.

Gross domestic product in China, a key engine of the global economy, grew 7.6 percent in the second quarter through June, its worst performance in three years.

The government is targeting full-year expansion of 7.5 percent this year, though that is well below the 9.3 percent recorded in 2011 and the 10.4 percent in 2010.

Lu Ting, China Economist at Bank of America Merrill Lynch, said that the worsening situation is likely to tip Chinese authorities to push further stimulus measures.

"With worsening growth outlook and muted inflation pressure, we expect the government to take more action to support growth," he said in a report.

Lu added that such efforts will likely focus on improvements to urban infrastructure and increasing the supply of land as well as two additional cuts by the central bank to reserve ratio requirements for banks and the easing of some curbs on lending.

China has already taken steps this year to stimulate growth by cutting interest rates twice in quick succession and slashing the amount of funds banks must keep in reserve as methods to stimulate lending.

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