China’s Trade Growth Beats Forecasts

BEIJING — China’s trade performance zoomed past forecasts in January, as import growth hit a six-month high, data showed Wednesday, confounding earlier analysis suggesting that the economy was mired in a deepening slowdown.

The value of China’s total exports climbed 10.6 percent in January from a year earlier, the Customs Administration said, more than five times market forecasts of a 2 percent rise.

Analysts who had expected the Lunar New Year holiday to hurt trade flows cautioned, however, that the data might have been inflated by fake transactions, in which traders forge deals to sneak cash into the country past capital controls.

The value of imports jumped 10 percent from a year ago, a pace not seen since July, handily beating market predictions of a 3 percent gain. Imports of crude oil, iron ore and copper all hit record highs, according to customs data.

The country’s trade surplus rose to $31.9 billion, well above forecasts of $23.7 billion and the $25.6 billion surplus in December.

“This should allay some fears about a slowdown, but I’m also not sure how much comfort we can take from these numbers,” said Louis Kujis, an RBS economist in Hong Kong. “We know that a year ago there was some massive invoicing taking place. If you think about the incentives for over-invoicing, they are again very strong because of the interest rate differentials.”

A run of underwhelming economic data from China in recent weeks had led investors to prepare for another disappointment on Wednesday.

Fears of a sharper-than-expected loss of momentum in China were believed to be one contributing factor in a fierce global financial market sell-off in January, with emerging markets hit particularly hard.

Four purchasing managers’ indexes had shown China’s factory and services sectors sliding to multimonth or multiyear lows in January, as celebrations for the Lunar New Year, China’s biggest annual holiday, reduced the number of work hours. Many factories and offices close during the festivities.

A resilient Chinese economy is good news for the world, particularly for major commodity exporters like Australia.

Already the world’s biggest exporter, China may overtake the United States to be the world’s largest importer this year, HSBC Bank has predicted.

Economists expect China’s economy to grow at its slackest pace in 14 years this year at 7.4 percent. But even at that rate it is expected to add twice as much demand to the world economy as the United States, HSBC said.

via:http://www.nytimes.com/2014/02/13/business/international/chinas-trade-growth-beats-forecasts.html?partner=rss&emc=rss