Flash Comment: China: Resilient exports, slowing imports

 China’s exports remain surprisingly resilient despite weaker manufacturing PMIsacross the world, but its import growth is slowing substantially suggesting someweakness in domestic demand. However, so far import weakness has beenconcentrated in commodities and intermediate goods, suggesting it is driven mainlyby inventory adjustments and possibly some weakness in construction activity.

 China’s export growth is now again running ahead of import growth and the tradesurplus is increasing. The trade surplus in 2010 is on track to exceed the trade surplusin 2009, which supports the case for CNY appreciation.