China’s Export Surge Helps New Leaders Sustain Rebound
China’s exports exceeded forecasts in February, an indication that improving global demand may help to sustain the rebound in the world’s second-biggest economy.
Overseas shipments increased 21.8 percent from a year earlier, the customs administration said on its website today, in a month that had four fewer working days than last year. The number compares with the 8.1 percent median estimate in a Bloomberg News survey. Imports fell a more-than-estimated 15.2 percent, leaving a trade surplus of $15.25 billion.
Import growth lagged behind exports in the year’s first two months, adding to concern that domestic demand is failing to pick up. The new leadership set to take the helm at the National People’s Congress meeting ending March 17 is trying to sustain a recovery from the slowest expansion in 13 years while limiting shadow-banking risks and reining in property speculation.
“That the global shock to the export sector seems to have abated must be a comfort to policy makers,” said Tim Condon, chief Asia economist at ING Groep NV in Singapore. “The import number was disappointing but nothing to indicate a dramatic deterioration.”
Commerce Minister Chen Deming said in Beijing today that he’s “cautiously optimistic” on foreign trade this year and expects a “slightly better” performance than 2012.
The National Development and Reform Commission, the country’s economic planning agency, this week set a target of 8 percent growth in trade for 2013 after the country missed its 10 percent goal in 2012 as demand from Europe, its second-biggest market, slumped.
China’s benchmark Shanghai Composite Index (SHCOMP) fell 0.2 percent to finish the week down 1.7 percent after the government intensified a campaign to cool property prices.
Exports to the European Union rose 16.5 percent, marking the third straight advance for the first time since 2011. Shipments to the U.S. increased 15.7 percent, while sales to Japan dropped 6.5 percent. Imports from South Korea, China’s top supplier, fell 12.9 percent.
Combined exports for January and February increased 23.6 percent from a year earlier, compared with previously released data showing a 6.8 percent gain in the same period in 2012. Total imports for the first two months rose 5 percent from a year earlier, compared with a 7.9 percent increase last year.
Economic indicators in the first two months of the year are distorted by the weeklong Lunar New Year holiday, which was in January in 2012 and February this year.
“It seems the market was too pessimistic about China’s exports,” said Zhu Haibin, chief China economist at JPMorgan Chase & Co. in Hong Kong. “They should become more optimistic about China’s foreign trade after the January and February data.”
“Of course, China’s overall economic performance in 2013 will be decided by domestic demand instead of external demand,” said Zhu, whose forecast of a 19.3 percent gain in exports was the second most-accurate estimate.
Today’s data renewed skepticism among some economists that the trade figures are a true representation of demand. Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, said in a note that companies may be overstating exports and understating imports to move funds into China and circumvent capital controls.
There are also “some discrepancies” between China’s reporting of exports to Hong Kong and Hong Kong’s reporting of imports from China, Chang Jian, an economist at Barclays Plc in Hong Kong, said in a Bloomberg Television interview.
February readings of four purchasing managers’ indexes fell, with two gauges of manufacturing dropping to close to the 50 line that divides expansion from contraction, raising concerns an economic recovery that started in the fourth quarter may be peaking.
In contrast, new lending in January was the highest in two years and a broad measure of credit, known as aggregate financing, rose to a record, central bank data showed.
China’s gross domestic product increased 7.9 percent in the last three months of 2012 from a year earlier, the first acceleration in two years. Expansion may pick up to 8.2 percent in the three months through March before slowing to 8 percent in the fourth quarter, according to the median estimates in Bloomberg surveys last month.
The Chinese economy “will grow a little bit faster than the 7.5 percent target” of the government, Stephen Roach, former non-executive chairman for Morgan Stanley in Asia, and a senior fellow at Yale University, said in an interview with Bloomberg Television today.
Adjusted for the number of working days, China’s exports rose 20.6 percent in February from a year earlier while imports increased 6.5 percent, the customs administration said.
Estimates for exports in a survey of 33 analysts ranged from a decline of 10 percent to an increase of 35.9 percent. In January, shipments rose 25 percent from a year earlier.
The drop in imports compared with the median estimate for a decline of 8.5 percent in a survey of 33 economists whose forecasts ranged from a fall of 19.5 percent to an increase of 5 percent. Inbound shipments jumped 28.8 percent in January.
The trade surplus compared with the median projection for a $6.9 billion shortfall after a $29.15 billion surplus in January.
Elsewhere in Asia today, revised figures showed that Japan returned to growth in the fourth quarter, bolstering Prime Minister Shinzo Abe’s campaign to end 15 years of deflation and revive the world’s third-biggest economy.
Gross domestic product rose an annualized 0.2 percent, compared with a preliminary calculation of a 0.4 percent contraction. The nation’s current-account deficit in January was 364.8 billion yen ($3.8 billion), the finance ministry said in a separate release.
Germany will report industrial production data today, while the U.S. publishes the latest jobless rate, forecast to have stayed steady at 7.9 percent in February.
China’s National Bureau of Statistics will release February inflation data at 9:30 a.m. tomorrow. Consumer-price gains may have accelerated to 3 percent from a year earlier, compared with a 2 percent pace in January, based on the median analyst projection. Factory-gate prices probably declined 1.5 percent.
Combined January and February figures for industrial production, retail sales and fixed-asset investment will be released tomorrow at 1:30 p.m. in Beijing.
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