China exports pick up more than expected in December

Tuesday, 15 January 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: China’s export growth rebounded more strongly than expected in December from a three-month low, expanding at the fastest rate in seven months, although the outlook for 2013 remains cloudy with US and European demand for Chinese goods still subdued.

Trade data from the world’s second-largest economy showed the value of exports grew 14.1% last month compared with a year earlier, racing past the forecasts of analysts polled by Reuters, who had expected annual growth of 4%, and accelerating sharply from 2.9% in November.

The value of imports grew 6% on the year in December, also handily beating market forecasts for a 3% rise and quickening from zero growth in November. “At the year-end, exporters tend to respond quickly to increases in external orders. The temporary rise could be a result of some seasonal factors that resulted in the spike,” said HSBC economist in Beijing, Ma Xiaoping. “If you look at the fundamentals of US and Europe, this could be a temporary rise. In coming years, we expect growth to remain at a low level, below 10% for 2013. Imports show domestic demand gaining momentum.”

Despite the improvement in December, Thursday’s data confirmed that China had missed its 10% growth target for trade for 2012, underlining that exports have been the biggest drag on China’s economy over the past two years.

China’s Commerce Ministry last month also cautioned against hoping for an imminent recovery in trade, saying that world economic growth remained languid. “We’re hitting a low base for the next several months, so that means the headline will be looking better for December and for the first quarter,” said economist at Daiwa in Hong Kong, Kevin Lai.

“I suspect that smartphone shipments were still quite strong into December given new launches that month. The picture is still more mixed regionally.”

Exports from South Korea unexpectedly fell last month, though the government blamed the poor performance on fewer working days.

Exports from Taiwan, on the other hand, surpassed expectations to rise to three-month highs, although analysts warned that shipments may have been lifted by the year-end shopping season. China’s Trade Sector, a key part of the economy that supports an estimated 200 million jobs. Net exports from China have subtracted from growth in its Gross Domestic Product (GDP) since March 2011, and had shaved 0.4% points off GDP expansion in the third quarter.

With Europe expected to sink deeper into recession this year, analysts say it is another difficult year for Chinese trading firms.