China's imports unexpectedly rose in August for the first time in nearly two years, boosted by coal and other commodities, suggesting domestic demand may be picking up and putting the world's second-largest economy on a more balanced footing.
Exports also showed signs of improvement, falling by a less-than-expected 2.8 percent from a year earlier, as demand in the United States, Europe and even Japan showed some signs of improvement, data showed yesterday. If it proves sustainable, a trade recovery or even signs of trade stabilization would help ease fears that China's economy is becoming increasingly lopsided, and give feeble global growth a much-needed shot in the arm.
In recent months, China's economy has shown signs of stabilizing, but growth has become more dependent on a government infrastructure spending spree and a housing boom as private investment fizzles and exports remain sluggish.
"The improvement in imports is mostly a reflection of stronger domestic demand. Chinese companies are restocking (raw materials), and also are now expecting prices to start rising," said Wang Jianhui, an economist with Capital Securities in Beijing. "There is also some expectation that the economy is improving. As we are entering the high season in the fourth quarter, we expect exports to stay stable and imports to improve as higher prices spread to more products."
China's 1.5 percent import rise was the first expansion in value terms since October 2014. Economists polled by Reuters had expected a fall of 4.9 percent, moderating from a sharp 12.5 percent tumble in July. While a surge in commodity prices is widely acknowledged as a major factor for the rebound in imports, analysts believe the surprising uptick also reflected stronger domestic demand, which is fueling a brighter profit outlook for Chinese manufacturers. "The size of the pick-up suggests that there may also have been some improvement in import volumes last month," Capital Economics said in a note. Non-commodity imports also rebounded, HSBC said in a note, noting gains in machinery imports. The launch of new consumer electronic gadgets ahead of the year-end shopping season may also have given a boost to China's supply chain, as firms imported more components to make products such as Apple's iPhone 7, which officially launched this week. A similar bounce in hi-tech was seen in Taiwan's export data on Wednesday, though analysts are sceptical it will last much beyond the seasonal Christmas peak.
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Research Associate at Center for Islam and Global Affairs (CIGA) at Istanbul Sabahattin Zaim University