Chinese Trade Deficit Grows as do Suspicions on Chinese Data.


Early this morning China’s Trade Balance report was released. It showed that Chinese exports rose less than forecast for the first time in four months. This has raised questions as to the accuracy of the data in previous reports with the Chinese government accusing certain companies of filing false customs reports in order to boost their numbers.

Exports were shown to have risen by 10 percent as compared to the figures from March 2012, but imports also rose by 14.1 percent. These figures testify to a Chinese trade deficit of $884 Billion. Concerns are mounting that the health of Chinese exports could further deteriorate as hard times in both the U.S and Europe lessen the demand for Chinese imports. Exports were demonstrated to have fallen to Japan, South Korea, the European Union, the United States and Canada.

Chinese exports to japan have definitely been affected by a rapidly falling yen. The Japanese currency has fallen 22 percent against the Chinese yuan and this is certainly contributing to a decrease in the competitiveness of Chinese products in Japan. This is perhaps most visible in the 3.9 percent drop in Chinese textile exports to Japan in the first quarter of 2013 as compared to 2012.

Another aspect of the report was an unprecedented rise in exports to Hong Kong. The figures show an increase to the tune of 14.1 percent, the highest in over 18 years. These exports accounted for upwards of 27 percent of all Chinese exports and were worth $48.4 billion. In addition to this Exports to Taiwan were shown to have risen by 44.9 percent, with Taiwan contradicting this data by reporting a 1.2 percent decline in imports from China. All of this casts further suspicions as to the veracity of the data coming from China.

With questions as to the quality of Chinese economic data and a global downturn meaning reduced demand, commentators are forecasting that Chinese growth is in the process of trending down to as low as 6 percent in the coming years. Also Chinese imports continue to rise, a sizable portion of these imports stemming from an increased need for raw materials, this too will adversely affect China’s forthcoming trade balance reports.

The markets have pretty much taken it as read that Chinese exporters are falsifying orders in order to obtain export tax rebates from the Chinese government.

Generally the report has not provided binary traders with much grist for their trading mill. With many more focused on the major currency pairs the report will have passed many by. Nevertheless there were some interesting binary options to be had on indices in the wake of the report. The benchmark Shanghai Composite Index fell 0.3 percent so profitable Put trades were to be had by traders were up at all hours.