China’s trade data remained soft in August

China's trade figures remained soft in August. The exports dropped by 5.5% yoy in August, compared with -8.3% in the prior month and market expectation of -6.6%. Imports surprised the market on the downside by a large margin, slashing 13.8% yoy, down from -8.1% in July. 

Shipments to the US dropped by 1.0% in August while the exports into the EU fell by 7.5%. On a volume basis, China's imports of iron ore and copper fell by 0.2% and 8.1% YTD respectively, while imports of crude oil picked up by 9.8% in the first eight months of this year. As imports underperformed, China registered another huge monthly trade surplus at USD60.2bn in August, very close to the record high of USD60.6bn in February 2015. 

Naturally, the focus is on the divergence between trade surplus and foreign reserves. China has accumulated USD746bn trade surplus since January 2014, while the foreign reserves dropped by USD264bn during the same period, notes Commerzbank. To some extent, this could suggest that large amount of money is leaking from the economy.