June Foreign Trade Data: Tail Factor Still Disturbing Export Data

In June, China's import and export data were both negative growth. The foreign trade data released by the General Administration of Customs show that in June, China's import and export volume was 321 billion 510 million US dollars, an increase of -2%. Exports rose -3.1% over the same period, the first negative growth in 17 months, and import data grew by -0.7%. After regulation of hot money, exports basically increased in June except for "moisture". At present, besides the continued weak market demand at home and abroad, the pressure factors on exports, such as exchange rate and operating costs, are on the rise. The weakening of domestic demand and the slump of commodity prices also cause a drag on imports. Therefore, the performance of China's import and export data in June is much lower than that of the market. It also means that China's economic data in the two quarter are hardly optimistic.

Export increases data or interferes with future export statistics. Since the second half of last year, China's export data began to show a sharp increase in the influence of hot money and reached its peak in the first quarter of this year. Through the calculation of foreign trade cargo throughput data and the calculation of trade factors in Hongkong, China's real foreign trade performance is still weak. Export growth in the first quarter is slightly better than that in the fourth quarter of last year, while the export data calculated in the two quarter continue to slow down, so the water data caused by hot money arbitrage has disturbed the true export performance. However, the result is a virtual base that has been formed since the second half of last year, which may make the export data lower in the second half of this year, and the base interference will be very serious in the first quarter of next year.

It depends on whether the statistics department adjusts the caliber to maintain the authenticity of the data.

Import growth is expected to be relatively moderate and export performance will remain weak. From the perspective of trade, the growth rate of export growth of processing trade was significantly lower than that of general trade. In June, the growth rate of processing trade exports was -10.2% year-on-year, while that of general trade increased by 1.6% over the same period last year. Export processing trade in the two quarter continued to decline, with growth showing a low level in four years and a drag on the overall export trade. The import growth of imports in general trade began to slow down since the fourth quarter of last year. Although the last two months have been slowing down and growing at a single digit level, it has apparently got rid of the downturn in the three quarter of the year. This also reflects that although the domestic economy is still on the low growth trend, the domestic demand is still relatively stable relative to the overseas market.

Overseas economic performance and exchange rate factors are the key to the stability of foreign trade. With the improvement of US economic data and the contraction of QE, the global hot money begins to flow back, which is expected to alleviate the pressure of RMB appreciation to a certain extent. If the US economic recovery is obvious in the second half of the year, and Europe will not have worse economic data, it will be beneficial to the growth of China's export demand. The performance of imports is expected to increase significantly as the central government pushes domestic demand in the second half of the year and commodity prices gradually recover. However, under the government's total control and limited stimulus, future policies will still focus on how to effectively stimulate domestic demand and focus on industrial policies. Import performance is expected to be better than exports, but the margin is still limited. It is expected that in the two quarter after the slowdown in foreign trade, the probability of economic growth in the three quarter is rising than that of stabilizing, but the pattern of the bottom of the overall economy has not changed.