Chinese exports smashed expectations last month, a positive sign for the global economy, but analysts warned of an uncertain outlook as US president-elect Donald Trump prepares to take office, with Beijing’s trade policy in his sights.
China exports broke a seven-month losing streak, rising a forecast-beating 0.1 percent year-on-year to US$152.2 billion, government data showed yesterday, as a plunging yuan helped boost shipments by making the country’s goods cheaper for overseas buyers.
The export figure smashed a Bloomberg News survey of economists predicting a 5 percent drop.
Imports also beat forecasts, suggesting the world’s No. 2 economy has stabilized on the back of aggressive policy easing to meet Beijing’s growth targets despite years of slowdown.
Imports rose 6.7 percent year-on-year to US$152.2 billion last month, customs data showed, far stronger than expectations of a 1.9 percent fall.
The trade surplus slipped to US$44.6 billion in the month.
The readings were a massive improvement on the previous month, when exports dived 7.3 percent and imports fell 1.4 percent.
Stable overseas demand and a weaker Chinese currency helped boost exports, with the yuan sliding against the US dollar to eight-year lows in recent weeks, but China’s trade faces an uncertain outlook as Trump, who has blasted Beijing for protectionist policies and alleged currency manipulation, prepares to be sworn in as US president next month.
“Despite today’s positive surprise, the medium-term outlook for Chinese trade remains challenging,” Julian Evans-Pritchard of Capital Economics said in a note.
While developed economies are ending the year on a strong note, a broadly sluggish outlook for growth leaves little room for further upside in exports, he said, while the cooling of China’s red-hot property market would suppress demand for imported commodities.
Meanwhile, China has indicated it could relax restrictions on foreign investment in some sectors as it struggles to counter an overseas exodus of capital, while facing accusations of protectionism from Trump.
A record-setting wave of Chinese investment abroad has fueled concern in Beijing over capital flight, reckless spending overseas and the yuan’s fall against the US dollar.
A notice from China’s economic planning agency late on Wednesday said foreign investment restrictions could be eased in sectors such as automotive electronics; rail transport equipment; some mining, agricultural and chemical production; theme parks; and golf courses; as well as some service industries.
Such notices typically result in policy changes.
Beijing is struggling to prop up the yuan as capital flows out of China’s flagging economy in search of better investments in the US, where the US Federal Reserve is expected to hike interest rates next week and into next year.
China’s foreign exchange reserves plunged US$69 billion to a five-year low last month, according to data released on Wednesday, with analysts blaming capital flight and central bank attempts to support the yuan.
The EU Chamber of Commerce said in a statement yesterday that China’s new approval requirements for cross-border capital outflows for amounts exceeding US$5 million would “cause funds to be trapped in China.”
The American Chamber of Commerce in China said in a statement the group was “concerned about the added burden” the approval requirements may place on moving money overseas and would seek clarification from authorities.
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