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World Economy

OPEC Monthly Oil Market Report – October 2017

27

Graph 3 - 27: Chinese CPI and PPI

Graph 3 - 28: Chinese trade balance

China's merchandise trade

surplus fell to $42 billion in August of 2017 from $50.2 billion in the same month

a year earlier and below market consensus of $48.6 billion. It was the smallest trade surplus since May, as

exports

rose less than imports. In August, sales grew by 5.5% y-o-y to $199 billion, slowing from a 7.2% rise

in the previous month while markets expected a 6.0% gain. This was the weakest increase in outbound

shipments since the 2% fall in February, and was due to a softening of global demand.

Imports

increased by

13.3%, following an 11% increase a month earlier, to $157 billion. It marked the tenth straight month of

growth in inbound shipments.

Graph 3 - 29: Chinese merchandise trade by selected countries, NSA

The

average prices of new homes

in 70 Chinese cities rose 8.3% y-o-y in August of 2017, slowing from a

9.7% increase in July. It was the 23rd straight month of gains but the weakest advance in house prices since

July 2016.

China’s monetary policy

is set to remain relatively tight in the 4Q17. Although economic momentum

moderated in August, financial market deleveraging and a rebound in inflation continue to support a cautious

monetary tightening stance in 1H18.

The

trade surplus

with the US, China's largest export market, widened to $26.23 billion from $25.20 billion

in July. It is the highest surplus since September 2015.

Industrial output

continued to decelerate in August, growing 6.0% y-o-y, down from 6.4% y-o-y in July.

Service sector activities, on the other hand, continued to grow at a faster pace.

1.7

6.4

4.4

-10

-5

0

5

10

Sep 15

Nov 15

Jan 16

Mar 16

May 16

Jul 16

Sep 16

Nov 16

Jan 17

Mar 17

May 17

Jul 17

Sep 17

CPI

PPI

Official interest rate

Sources: China Index Academy, China National Bureau of

Statistics, Soufan and Haver Analytics.

% change y-o-y

189

199

-139

-157

50

42

-200

-150

-100

-50

0

50

100

150

200

250

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

US$ bn

Exports

Imports

Trade balance

Sources: China Customs and Haver Analytics.

-30

-20

-10

0

10

20

30

40

US exports US imports EU exports EU imports UK exports UK imports ASEAN

exports

ASEAN

imports

US$ bn

Aug 15 Sep 15 Oct 15

Nov 15 Dec 15 Jan 16 Feb 16 Mar 16 Apr 16

May 16 Jun 16 Jul 16

Aug 16 Sep 16 Oct 16

Nov 16 Dec 16 Jan 17

Feb 17 Mar 17 Apr 17

May 17 Jun 17 Jul 17

Aug 17

Sources: China Customs, Haver Analytics and OPEC Secretariat.