China exports up, but concerns linger on potential trade stand-offs
beijing — Chinese exports surged more than forecast in January, data showed Friday, in a fresh sign of improvement in the world’s number two economy as leaders prepare for possible trade stand-offs with US President Donald Trump.
The strong figures come as Beijing looks to position itself as leader of the global trade regime in anticipation of a US retreat under a protectionist Trump administration.
Officials at the Customs bureau said overseas shipments jumped 7.9 per cent on-year to $182.8 billion, easily outstripping the 3.2 per cent tipped in a survey of economists by Bloomberg News. It also reversed December’s 6.1 per cent plunge.
Last month data showed the economy, a key driver of growth around the world, expanded in 2016 at its slowest pace for more than a quarter of a century, but saw a surprise improvement during the final three months.
And last week a reading on factory activity for January indicated the manufacturing sector was stabilising.
Imports also exceeded expectations, rising 16.7 per cent to $131.4 billion, compared with an expected 10 per cent increase. The trade surplus climbed to $51.3 billion, beating estimates by more than $2 billion.
“Chinese trade values have been picking up in recent months thanks to a revival in global manufacturing, the continued strength of China’s domestic economy and the rebound in global commodity prices,” said Julian Evans-Pritchard of Capital Economics.
However, he pointed out: “It’s likely that much of the pick-up last month was seasonal”, noting that “all of the pre-holiday rush to import goods and meet exports orders fell in January”, with the country stocking up before Chinese New Year, when most businesses close.
“The strong data was related to the global pick-up in growth in the US, Europe and also emerging economies,” Mizuho Securities chief Asia economist Shen Jianguang told Bloomberg News.
But it can also be explained by a weakened yuan, which has made Chinese exports more affordable, Nomura analysts said.
The yuan is wallowing near eight-year lows against the greenback as investors, frightened by a weaker Chinese economy and the prospect of better returns in the US, withdraw their cash from the country. Exports, Nomura said in an analyst’s note, “are benefiting from the depreciation of RMB’s real effective exchange rate over previous quarters”.
Chinese stocks closed solidly higher on Friday as investor confidence was boosted by the trade data, dealers said, with the benchmark Shanghai Composite Index up 0.42 per cent.
Yet while overall exports grew, China’s steel exports fell 23.8 per cent in January year-on-year, customs said — the result of Beijing’s efforts to reduce steelmaking overcapacity after continuous pressure from the EU and the US, which have accused the Asian giant of dumping. By far the world’s largest producer of steel, China last month exported 7.42 million tonnes of the product — less than the 9.74 million tons exported in January 2016 and the 7.8 million tons in December.
Despite optimistic assessments of the strong trade figures, most analysts agreed that US President Donald Trump’s hawkish trade policy stance towards China posed a major risk to continued Chinese export growth this year.
The billionaire politician seemingly remains intent on following through with a series of election promises that included a review of global trade deals he says are unfair to the US.
Last week he once again accused Beijing — as well as Japan — of currency manipulation to give its exporters a trade advantage of US firms, while he has also warned of huge tariffs on Chinese goods. “The exports outlook for China is good, except for the potential risk of a Sino-US trade war,” Shen said.
A high-ranking diplomat from an EU country told AFP that he believed a US-China trade war “would damage the Chinese economy but still be manageable” — though one accompanied by trade frictions with the EU “would be potentially disastrous for China”.
Hopes for a less confrontational relationship between the two economic giants were boosted Friday by news Trump had reaffirmed to President Xi Jinping Washington’s “One China” policy.
The move, acknowledging Taiwan is not a separate country, was seen as an apparent effort to ease tensions after Trump angered Beijing by questioning the policy that underpins Sino-US relations.