Trade data im­prove eco­nomic prospects

Strong re­bound sug­gests sec­ond-largest econ­omy is sta­bi­liz­ing, an­a­lysts say

China Daily (Hong Kong) - - FRONT PAGE - By LI JI­ABAO in Bei­jing, YU RAN in Shang­hai and LI XIANG in Paris

Global in­vestors got a sigh of re­lief on Thurs­day, as China’s bet­ter-thanex­pected trade growth ap­peared to sug­gest world de­mand is re­cov­er­ing.

China’s ex­ports in July rose 5.1 per­cent year-on-year af­ter slid­ing 3.1 per­cent in June, the Gen­eral Ad­min­is­tra­tion of Cus­toms said. Im­ports surged 10.9 per­cent, com­pared with the 0.7 per­cent de­cline in June. “The July fig­ures are sat­is­fac­tory,” said Huo Jian­guo, pres­i­dent of the Chi­nese Acad­emy of In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion, a govern­ment think tank.

“Ex­ports re­turned to the nor­mal growth track and the sharp re­bound of im­ports signals the eas­ing of down­ward pres­sure on the Chi­nese econ­omy,” Huo said.

Global stock mar­kets re­sponded pos­i­tively to China’s data as shares jumped in Syd­ney, Seoul, Hong Kong and Euro­pean cities on Thurs­day.

The Chi­nese econ­omy recorded its worst per­for­mance in 13 years in 2012, with GDP ex­pand­ing 7.8 per­cent. Growth dipped to 7.7 per­cent in the Jan­uary-March pe­riod and slowed fur­ther to 7.5 per­cent in the sec­ond quar­ter.

The July trade fig­ures soothed worries that China’s econ­omy may ex­pe­ri­ence a hard land­ing.

Chen Hufei, a re­searcher at Bank of Com­mu­ni­ca­tions, said the im­prove­ment in ex­ports came af­ter a re­cov­ery in de­mand for Chi­nese goods, al­though the re­cov­ery is not solid.

China’s ship­ments to the United States and the Euro­pean Union, its top two mar­kets, in­creased in July for the first time in five months.

July ex­ports to the US climbed 5.27 per­cent year-on-year and those to the EU gained 5.87 per­cent.

Jean- Paul Lar­con, a pro­fes­sor of strat­egy and in­ter­na­tional busi­ness at HEC Paris, said the re­cov­ery in China’s ex­ports to the EU was “be­cause Europe is grad­u­ally re­cov­er­ing and Euro­pean en­ter­prises are start­ing to im­port more from China and the rest of the world”.

“I am op­ti­mistic about the fu­ture trade prospects,” Lar­con said. “The eco­nomic re­cov­ery is on track (in the EU). The trade data is a good sign that we are go­ing out of the bot­tom of the cri­sis. So in the next six months, the sit­u­a­tion could be bet­ter and ma­jor eco­nomic in­di­ca­tors could be back to the nor­mal level.”

China’s ex­ports are shift­ing to a mod­er­ate rate of growth from the dou­ble- digit ex­pan­sion of past years, but eco­nomic trans­for­ma­tion and re­struc­tur­ing helped ex­porters re­tain their mar­kets, Huo said.

Huo ex­pressed con­fi­dence that the coun­try can achieve its 8 per­cent trade growth tar­get for the year.

Wu Sheng­neng, a se­nior man­ager at Kang­nai Group, a lead­ing shoe­maker in China, said the com­pany in­tro­duced per­sonal de­sign ser­vices to cus­tomers this year to meet the ris­ing de­mand from high­end buy­ers who are look­ing for unique­ness.

The com­pany is ex­pect­ing 15 to 17 per­cent an­nual growth on sales by man­u­fac­tur­ing shoes to reg­u­lar over­seas clients at an aver­age price of $60 to $70 per pair, while most Chi­nese shoe­mak­ers only sell prod­ucts at $30.

Kang­nai has more than 100 stores in France, Italy and some South Asian coun­tries and makes shoes for sev­eral well- known brands in the world.

Late last month, the cen­tral govern­ment rolled out mea­sures to boost trade, such as sim­pli­fi­ca­tion of cus­toms clear­ance, re­duc­tion of ad­min­is­tra­tive fees and more fi­nan­cial aid.

Wang Jin, an an­a­lyst at Guo­tai Ju­nan Se­cu­ri­ties, said the im­prove­ment of im­ports in July sug­gested a re­cov­ery of do­mes­tic de­mand.

To keep GDP growth within rea­son­able lim­its, the State Coun­cil, led by Pre­mier Li Ke­qiang, in­tro­duced sup­port­ive mea­sures at the end of July for eco­nomic growth, in­clud­ing in­creas­ing in­vest­ment of rail­way and ur­ban in­fra­struc­ture con­struc­tion and stim­u­lat­ing in­for­ma­tion con­sump­tion, which helped in­crease do­mes­tic de­mand.

China also im­ported more ma­te­ri­als last month, re­flect­ing ris­ing de­mand from man­u­fac­tur­ing busi­nesses.

Iron ore im­ports to China, the world’s big­gest buyer of the raw ma­te­rial, rose 26.7 per­cent to 73.14 mil­lion met­ric tons in July as fall­ing prices spurred mills to stock up.

Last month, China was also the world’s sec­ond-big­gest oil con­sumer, and in­creased net crude im­ports to a record high 25.9 mil­lion met­ric tons, or 6.13 mil­lion bar­rels a day.

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