Pricing factors depress Chinese foreign trade

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/10

Measured in US dollars, China’s goods exports fell 18 % and imports 17 % in the first two months of this year. The foreign trade surplus for the period came to $96 billion. While the foreign trade trend points to weakening demand in China’s domestic and export markets, it also reflects large adjustments in prices. Prices of China’s export and import goods overall have been declining and the yuan’s exchange rate has been about 5 % weaker against the dollar compared to a year ago. Measured in volume, China’s foreign trade showed a modest contraction in January: exports were down 1 % and imports 2 % y o y.

Trends in the value of exports and imports are also distorted by companies disguising capital movements in import and export declarations given to China Customs. Changes in such avoidance of capital controls will have direct impact in trends of the value-based China’s foreign trade figures.

Foreign trade volume quarterly 2010–2015 and January 2016, %-change y-o-y
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Sources: China Customs and CEIC.

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