Lower-Than-Expected Trade Numbers Reflect Weak Demand Recovery

Economic Research	13 October 2016
China
Economic Highlights
Lower-Than-Expected Trade Numbers Reflect Weak Demand Recovery China’s export and import growth both missed market expectation in Sep 2016, indicating demand recovery remained sluggish. Looking ahead, weak economic condition may continuously bring headwinds for China’s trade terms. In the near term, China’s trade numbers could be slightly supported by low base effect and rising manufacturing PMIs in Oct/Nov 2016, but in a longer term there could be growing downside risks. We expect pressure to mainly come from 1) rate hike and political discontent in the US, 2) an early QE taper and drags from Brexit in the EU and 3) potential capital outflows from emerging economies. On the exchange rate side, CNY will face mounting depreciation pressure again in the coming months on the back of rising possibility of Fed’s rate hike, while pace of capital outflows is likely to under control. Economist:  Zhang Fan| +8621 6288 9611 ext 105
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