Mixed print for China's September trade

The structure of merchandise exports of China shifted toward high-tech industries, with shipments of transportation equipment and mobile phones climbing 25% and 13.9% y/y YTD, respectively. However, the contraction in imports accelerated to 20.4% last month, a seven-month low and worse than the 13.8% decline in August. The trade surplus in September was USD60.3bn, a seven-month high but driven mostly coming from import compression.

China's foreign trade in September shows a mixed picture, with exports falling less than in August but the decline in imports increasing. Exports fell 3.7% y/y in USD terms (-1.9% YTD) in September, slightly better than 5.5% decline in August, but still undershooting our 1.2% annual export growth forecast. 

The impact of lower oil prices remains significant (ie, oil imports by value declined 40.9% y/y YTD) and continues to weigh on nominal import growth. The negative price effect is expected to gradually phase out in Q4 15, says Barclays. At the same time, iron ore imports by volume rose 1.7%, compared with a decline of 1.0% in August; the nine-month import volume was flat y/y.

"Following the tepid NBS and Markit PMIs, the mixed trade data suggest the economy could bottom in Q3 due to soft external demand and sluggish domestic demand. Both exports and imports are expected to remain weak despite the modest improvement in the new orders and import indices of the NBS PMI", states Barclays.