Drop in imports pushes foreign trade surplus to record levels

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/07

The value of Chinese goods exports in January was $200 billion, or 3 % less than in January 2014. Imports in January, however, were worth just $140 billion, or 20 % less than a year earlier. As a result of the import drop, the goods trade surplus ballooned to a record $60 billion. China’s trade surplus for the past 12 months exceeded $400 billion. This figure includes bilateral trade imbalances of $240 billion with the US and nearly $130 billion with the EU.

While the feeble trend in imports is symptomatic of China’s slowing economy, it may not be wise to extrapolate from the January figures. The halving of global oil prices, the 20 % drop in metal prices and depressed prices for farm products over the past year partly explain the drop in the value of imports. While also import volumes of certain raw materials have fallen in the last months, e.g. crude oil imports held at the same level in January as a year earlier.

Commodity price trends are also evident in Chinese exports, particularly in cases of lower export growth to many commodity-producing countries. This trend is strengthened by the fact that the currencies of many commodity producers have weakened relative to the yuan. Chinese exports to the United States, however, continued to improve in January, even if exports to EU countries went into the red and the decline in exports to Japan steepened. While Chinese exports reflect conditions in the global economy, special factors that come into play around the year shift tend to obscure deeper trends in exports as well as in imports.

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