uploads///Chinas Trade Balance in August

What Does China’s August Trade Data Indicate?

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Sep. 12 2016, Updated 11:05 a.m. ET

China’s August trade data

According to a report from the General Administration of Customs, China reported a $52.1 billion surplus in August 2016 as compared to a $59.7 billion surplus in August 2015. The trade data was below market expectations.

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Exports and imports

On a year-over-year basis, China’s (FXI) (YINN) exports fell by 2.8% in August as compared to a 4.4% drop in the previous month. China’s imports rose by 1.5% compared to a 12.5% drop in July. Markets expected a fall of 4.9% in imports. China’s imports saw their first YoY increase after 22 months. The slowdown in Chinese exports indicates the weakness in global (ACWI) (VTI) demand. Improving imports are signaling increasing domestic demand in the economy.

Impact on the economy

As China (MCHI) (YINN) (ASHR) is a major player in the metal and industrial sector, its trade report will impact the commodity (DBC) segment and the industrial sector. Read Why China’s August Trade Data Are a Mixed Bag for Metal Investors to learn more.

Over the last six months, we’ve seen that China’s (MCHI) economy is transitioning. It’s changing from a manufacturing hub to a consumption-based economy. This process will speed up economic growth in the country. Prominent fund manager Mark Mobius has an optimistic view on China. He believes that this transition will take five years but ultimately drive growth in the economy.

In the next part of this series, we’ll see which indicators investors should look for this week.

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