China's trade data continues to point to weak external demand

Customs China released their latest report on the Chinese trade which showed that the country’s trade surplus and exports bettered expectations, while imports surprised to the downside. China trade balance for July came in at a surplus of $52.31 billion, better than $47.6 billion expected and compared to $48.1 billion in June.

Exports fell 4.4 percent on-year, roughly in line with market expectations. Imports fell 12.5 percent in U.S. dollar terms, more than expected. In yuan terms, July trade data showed exports rose 2.9 percent on-year and imports fell 5.7 percent.

With the impact of Brexit still hanging over China’s export driven demand, commodity imports should experience even further weakness in the coming months. Export outlook in the medium-term remains cloudy amid the rising uncertainties. Data largely reflects the fragile nature of domestic demand and raises scope for more growth-supportive policies.