China’s Mixed Data Raises Growth Questions

China’s buoyant exports pushed its trade surplus to a record in July, fuelling optimism global demand will help counter pressure on the domestic economy from a weakening property sector.

While manufacturing appears to have picked up in the world’s second-largest economy, unexpected weakness in the services sector this week has renewed concerns about the growth outlook. The weak housing market remains China’s biggest risk, posing a drag on the broader economy and investor confidence.

Recovering global demand may not be enough to bolster a weak internal economy weighed by a cooling property sector and Beijing’s anti-corruption drive, suggesting policy support will likely continue to keep economic growth on track, analysts say.

 
Exports in July jumped 14.5 percent from a year earlier – the fastest pace in 15 months, the General Administration of Customs said on Friday, doubling from 7.2 percent in June and roundly beating market expectations. Exports were stronger than expected even after pricing in inflated export data in early 2013, when firms falsified invoices to skirt capital curbs.

Some analysts attributed the export spurt to delayed shipments caused by recent volatility in the yuan which may not sustain. Meanwhile, imports fell 1.6 percent versus a rise of 5.5 percent in June, leaving the country with a record trade surplus of $47.3 billion for the month.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza