Tentative signs of stabilization in China's exports

The Chinese September trade numbers continue to point to a sharp decline in imports albeit some tentative signs of stabilization in exports. In CNY terms, exports fell 1.1% y/y which was not as bad as expectations of -7.4% and better than August's -6.1%. On a 3-month trend basis, it held around -5.4% vs -4.3% in August. 

Imports slumped 17.7% y/y, posting the 11th consecutive month of decline. It was even weaker than consensus of -16.5% vs -14.3% in August. The 3-month trend slipped to -13.5% vs -9.9% previously. The trade surplus held steady around CNY376bn from CNY368bn in August. 

In USD terms, exports fell 3.7% y/y (consensus: -6%) vs -5.5% previously while imports slumped 20.4% (consensus: -16%) vs -13.8% previously. The trade surplus remained above the USD60bn mark for the 2nd consecutive month at USD60.3bn vs USD60.2bn previously. Year-to-date, exports are up only 0.7% and imports down 15% in USD terms while the trade surplus is at USD427bn, notes Commerzbank. 

The sharp slide in imports reflects the correction in commodity prices and hence, reduced import bill; and continued weakness in domestic investment activity. The FX and rates market have reacted more to the weak import figure more so than exports. 

USD-CNY is higher by around 100 pips post-release to around 6.3370 and USD-CNY also higher to 6.3360, says Commerzbank.