China exports pick up as measure of credit surges 28%

Bloomberg

Fri, Jan 11, 2013 - Page 15

China’s exports rose more than forecast last month and a broad measure of credit surged 28 percent, helping the nation’s new leaders sustain a pickup in economic growth after a seven-quarter slowdown.

Overseas shipments increased 14.1 percent from a year earlier, the most since May, customs administration data showed yesterday, compared with the 5 percent median forecast in a Bloomberg News survey of 40 economists.

Aggregate financing of 1.63 trillion yuan (US$262 billion), which includes bank and non-bank lending, was up from 1.27 trillion yuan a year earlier, according to the central bank.

Asian stocks extended gains and the Australian dollar strengthened after the reports spurred confidence that the recovery in the world’s second-largest economy is gaining traction and global demand is stabilizing.

A subdued US recovery and European austerity measures may restrain China’s trade this year, while growth in non-bank financing threatens to increase debt risks.

“This improves the sequential momentum after weakness earlier in 2012,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Plc in Hong Kong, who previously worked for the World Bank in Beijing.

Strength in imports last quarter is also “indicative of a further recovery” in GDP from the previous period, Kuijs said.

Imports for last month grew 6 percent after being unchanged the previous month. The trade surplus almost doubled from a year earlier to US$31.6 billion.

China’s exports rose 7.9 percent for all of last year while imports gained 4.3 percent, missing the government’s target of 10 percent growth in combined trade.

Overseas shipments increased 20.3 percent in 2011 and imports advanced 24.9 percent.

The worst year for trade in the past decade was 2009, when exports fell 16 percent and imports tumbled 11.2 percent.

Shipments to the EU rose 2.3 percent last month, the first gain since May, on demand from the UK and the Netherlands. Exports to the US, Canada, South Korea and India also accelerated.

Even so, the US replaced the EU last year as China’s largest export market, Zheng Yuesheng (鄭躍聲), head of the customs agency’s statistics department, said at a press briefing yesterday. Sales to the bloc fell 6.2 percent last year.

The two markets together accounted for one-third of China’s exports last year, customs data showed.

Last month’s exports may have been boosted by the impact of a strike at California ports that ended on Dec. 4 last year.

Rushed shipments and even faked exports to secure tax refunds may also have contributed to the stronger growth, said Alistair Thornton, a Beijing-based economist at IHS Inc.

China’s Ministry of Commerce, which oversees trade policies, said in a statement last month that it will seek to stabilize the scale of exports and improve support for trade growth this year.

Minister of Commerce Chen Deming (陳德銘) said in November last year that China’s trade will be “slightly better” this year than last year, and the second half of this year will be better than the first half.