China’s trade picked up and inflation eased last month as a shaky economic recovery gained traction.
Much of the change was due to the Lunar New Year holiday, which distorts China’s economic data each year. However, analysts said that data reported yesterday looked promising.
Export growth accelerated to 25 percent from the previous month’s 14.1 percent as companies rushed to fill orders before shutting down for a holiday break of up to two weeks. Import growth accelerated to 28 percent, more than quadruple the previous month’s 6 percent.
China’s trade growth has rebounded in recent months in a sign of economic recovery but longer-term trade measures are likely to show lower growth than last month’s double-digit increase.
Analysts say the recovery will be gradual and too weak to support a global rebound without improvement in the US and Europe.
“Seeing the underlying trend is a little difficult. Nevertheless, the data were above expectations and seem generally positive,” Moody’s Analytics economist Alaistair Chan (陳志雄) said in a report.
Last year’s Lunar New Year shutdown began in January, leaving fewer working days and boosting this year’s figures by comparison. This year’s holiday starts today, which will make this month’s trade look unusually weak.
Once holiday distortions are factored out, trade growth for the first three months of the year should be in high single digits, Goldman Sachs economists said in a report.
Last month’s inflation eased to 2 percent from the previous month’s 2.5 percent despite a 37 percent jump in vegetable prices after the coldest winter in seven years damaged crops, the National Bureau of Statistics reported yesterday. Vegetable prices in some areas soared 74.6 percent.
The inflation decline was due in part to comparison with last January, when the Lunar New Year holiday began earlier and food prices spiked as families stocked up for banquets. This year, the food price spike will show up in data for this month.
Pressure for prices to rise has increased in recent months, possibly constraining Beijing’s ability to support the recovery if needed with more spending or interest rate cuts. Inflation is politically dangerous in a society where the poorest families spend up to half their incomes on food.
Analysts warn that China’s recovery could be vulnerable if trade or government spending weaken.
“A deceleration is likely by the end of the year if further stimulus measures are not forthcoming, which they probably won’t because of latent inflation pressures,” Chan said. “Exports are expected to record moderate growth as the global economy recovers.”
China’s global trade surplus widened 6.5 percent year-on-year to US$29.2 billion last month. Exports were US$187.4 billion while imports totaled US$158.2 billion.
The politically volatile trade surplus with the US, which has temporarily overtaken the struggling EU as China’s biggest export market, narrowed by 2.8 percent from a year earlier to a still-hefty US$17.2 billion.
The trade surplus with the 27-nation EU contracted 10.9 percent to US$12.3 billion. Exports to France fell 6.4 percent and shipments to Italy were down 2.8 percent.