10/14/2014
By Jennifer Coombs

Global economic woes continue to weigh on equities, but there are a few sparks of hope in Asia. Exports of steel in China hit 8.5 million tons in September, while shipments increased 73% over last year. Steelmakers boosted the level of cheap exports in order to make up for domestic price cuts. China’s economy is getting somewhat of a boost today thanks to more economic data…

While growth has been looking dismal for China all year, the country’s economy got a jolt last month from faster export growth and external demand spilling over to boost imports for processing – namely for Apple’s (AAPL) new iPhone 6s. The iPhone 6 has had very positive impacts in the processing trade segment. The factory where the iPhones are produced is in Zhengzhou, and the customs department reported 6.22 million exports of new iPhone 6 models by September 21^st.

Exports in China increased 15.3% over last year, which was the largest monthly gain since February 2013, and beat the 12% median estimate. Imports increased 7.0% in September, which was way better than an estimated 2.0% decline from economists. This leaves the nation trade surplus at about $31.0 billion. Stronger exports ought to help China make it through a property slump even as the global outlook becomes blinded by weak economic data. An increase in imports for processing and re-exporting suggest that domestic demand is still weak in China. However a 34% increase in shipments to Hong Kong suggests that figures are probably inflated somewhat. A discrepancy between Hong Kong data for imports from China and Chinese figures for exports to Hong Kong since 2013 have revealed the practice of over-invoicing which inflated China’s export data.

Inflated invoices had been used to disguise capital inflows used to anticipate the rising of China’s currency. Most economists believe that China’s import/export data is far better on the surface that it is in reality. Ultimately, this suggests that China’s export growth is holding up, but the breakdown of the import data suggest that demand growth within its own economy is still feeble.

Jennifer Coombs
Wall Street Strategies

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