China: CPI eased post while trade posts shocking deficit figures - TDS

Analysts at TDS note that China posted a shocking trade deficit of -$US9.1b (mkt: +$US27b) in Feb, the first deficit since 2014 as exports plunged by –1.3%/yr (mkt +14.0%) while imports accelerated by +38.1%/yr (mkt +20.0%).

Key Quotes

“Although imports appear strong, there was a very weak Feb 16. Imports from Australia remain buoyant, while imports from key trading partners US and EU were also solid. However, given the distorted base effects, we await the March trade report before drawing stronger conclusions.”

“CPI eased to +0.8%/yr (mkt +1.7%/yr) in Feb while PPI climbed higher again to +7.8%/yr (mkt 7.7%). CPI was dragged down by food (–4.3%) particularly the –26% drop in vegetables. The correlation between PPI and oil price remains strong, pulling away from more modest increases in raw commodities and food prices in recent months.”

“On a side note, our proxy CPI (based on weighted food and non-food (2.2%)) is closer to flat rather than the published +0.8%/yr.”