Brighter prospects

China Daily (Hong Kong) - - FRONT PAGE - By LI JIABAO li­ji­abao@chi­

Im­prov­ing over­seas de­mand bet­ters the odds of China se­cur­ing 8 per­cent trade growth this year.

China’s ac­cel­er­a­tion of ex­ports and slow­down of im­ports in November left the coun­try with its largest trade sur­plus in more than four years.

The im­prove­ment of over­seas de­mand in­creased China’s chances of se­cur­ing an 8 per­cent trade growth tar­get this year. It also gave the new lead­er­ship more room to ad­vance re­forms and en­sure that mar­kets play a de­ci­sive role in the econ­omy.

But ex­perts cau­tioned that the in­flow of “hot money” has been dis­guised as trade pay­ments.

November ex­ports in­creased 12.7 per­cent year-on-year to $202.21 bil­lion, while im­ports stood at $168.4 bil­lion, up 5.3 per­cent year-on-year, the slow­est rise in im­ports since July, the Gen­eral Ad­min­is­tra­tion of Cus­toms said on Sun­day.

Over­all trade in the first 11 months of this year rose 7.7 per­cent year-on-year to $3.77 tril­lion, slightly lower than the govern­ment’s 8 per­cent growth tar­get set ear­lier this year.

The trade sur­plus in November, $33.8 bil­lion, was the high­est since 2009, when the govern­ment launched a large-scale stim­u­lus pack­age.

The coun­try’s over­all trade gains in the pe­riod from Jan­uary to November this year reached $234.15 bil­lion, more than the to­tal value for last year.

“November’s ex­port growth is par­tially ow­ing to the re­cov­ery in de­vel­oped economies and the sea­sonal de­mand surge through fes­ti­vals such as Christ­mas,” said Wang Jun, an ex­pert at the China Cen­ter for In­ter­na­tional Eco­nomic Ex­changes.

“But it’s very likely that spec­u­la­tive funds, or hot money, flowed into China chas­ing the ren­minbi ap­pre­ci­a­tion.”

Ac­cord­ing to Chen Hufei, a re­searcher at the Shang­haibased Bank of Com­mu­ni­ca­tions Ltd, “The ex­port surge in November was more pos­si­bly driven by the in­flow of hot money spec­u­lat­ing on the dif­fer­ence in in­ter­est rates at home and abroad as well as the con­tin­u­ous ap­pre­ci­a­tion of the ren­minbi.”

“What’s more, lo­cal gov­ern­ments may have over­stated the ex­port data to make the yearend per­for­mance look bet­ter.”

On Sun­day, the State Ad­min­is­tra­tion of For­eign Ex­change and China’s for­eign ex­change reg­u­la­tor said that “it will crack down on fake trade ac­tiv­i­ties for in­ter­est ar­bi­trage” and asked banks to re­port sus­pi­cious trade ac­tiv­i­ties.

In the first half of this year, for­eign trade com­pa­nies were caught over- in­voic­ing and ex­port growth in April was as high as 14.7 per­cent from a year ear­lier. SAFE then in­ves­ti­gated a crack­down on the prac­tice of in­flat­ing trade growth.

“November’s re­mark­able trade sur­plus will in­crease ex­pec­ta­tions for the ap­pre­ci­a­tion of the ren­minbi. It will also weaken China’s ex­ports next year when the US ta­pers off its mon­e­tary stim­u­lus and cap­i­tal flows out of China,” Wang said.

He added that China’s im­port growth in November was “in line with the coun­try’s eco­nomic per­for­mance”, while GDP growth in the last three months of this year “will be slightly bet­ter” than the three months end­ing Septem­ber.

“The in­her­ent driv­ing force for China’s eco­nomic growth is be­com­ing dy­namic and im­ports will main­tain steady growth in the fu­ture,” Chen said.

China’s eco­nomic growth re­bounded to 7.8 per­cent in the third quar­ter of this year af­ter slow­ing to a two-decade low in the pre­vi­ous quar­ter. Ear­lier this month, of­fi­cial fig­ures showed that China’s manufacturing growth in November main­tained a strong pace from the pre­vi­ous month to stay at a 19-month high.

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