China’s exports surged last month, exceeding all estimates as the economy benefited from US growth and worked through data distortions linked to the Lunar New Year holiday and a crackdown on fake invoicing.
Exports gained more than 48 percent from a year earlier, the customs administration said in Beijing yesterday. That compared with the median estimate for a 14 percent jump in a Bloomberg survey of analysts. Imports slid more than 20 percent, leaving a trade surplus of US$60.6 billion.
A recovering US has helped underpin China’s economy as it seeks to cut down excess capacity and transition to a reliance on domestic demand rather than infrastructure investment. Yesterday’s skewed numbers also reflect other factors, including the timing of the Lunar New Year holiday, plunging commodity prices and an effort to clamp down on capital outflows via faked trade receipts.
“The US is the single most important propeller, and Chinese exports basically follow the US economy,” Macquarie Securities Ltd head of China economics Larry Hu (胡偉俊) said. Hu estimates that a 3 percent expansion in the US economy would add an additional 0.5 to 1 percentage point to China’s growth by boosting the exports by 8 to 9 percent.
Exports to the US in the first two months jumped 21 percent in yuan terms. Shipments to ASEAN also increased in January and last month, rising 38 percent.
On Thursday last week, Chinese Premier Li Keqiang (李克強) announced a growth target of 7 percent for this year, the lowest set in more than 15 years. In his work report delivered to China’s legislature, Li also flagged increasing headwinds for the world’s second-largest economy, such as overcapacity and insufficient innovation.
“Chinese exports are humming along, which is a relief, as the domestic investment momentum is struggling,” Societe Generale SA Paris-based China economist Yao Wei (姚煒) said.
The government set the expansion goal for total trade at 6 percent in its work report, down from last year’s 7.5 percent. Chinese Minister of Commerce Gao Hucheng (高虎城) said on Saturday that he is “confident” of accomplishing the target.
The drop in imports was sharper than the median estimate of a 10 percent decline, signaling continued weakness in internal demand, as well as the fall in commodity prices. Stronger exports might also help China to get rid of an investment-driven growth model.
“The Chinese government will try its best to achieve the growth goal of about 7 percent,” Hu said. “If exports are good, they can do less in other aspects such as infrastructure investment.”
The trade surplus compared with a US$6 billion median estimate. The larger balance is expected to add uncertainty to the Chinese currency.
“An extraordinary growth of exports could be due to the base effect — the February 2014 figures were extremely low, as Chinese authorities cracked down on the round-tripping trade flows,” Australia and New Zealand Banking Group Ltd’s Liu Ligang (劉利剛) and Zhou Hao (周浩) wrote in a note in Hong Kong.
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