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China's trade surplus surges in January

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(Globalpost/GlobalPost)

China's trade surplus rose in January with both exports and imports beating expectations, official data showed Friday, as the country maintained its economic recovery on improving demand.

The trade surplus rose 7.7 percent year-on-year to $29.2 billion for the month, the General Administration of Customs said in a statement, beating a median $26.6 billion forecast of economists in a Dow Jones Newswires survey.

January exports from the world's second-largest economy jumped a solid 25.0 percent to $187.4 billion, while imports soared 28.8 percent to $158.2 billion, said Customs.

The growth rates were also above market estimates at 17.5 percent for exports and 23.5 percent for imports, according to Lu Ting and Zhi Xiaojia, analysts at Back of America Merrill Lynch in Hong Kong.

But Customs noted that there were more working days last month than in January 2012, due to the timing of the Lunar New Year, affecting the figures.

After taking out factors linked to the holiday, exports grew 12.4 percent last month year-on-year while imports increased 3.4 percent, it added.

Even so Zhang Zhiwei, a Hong Kong-based economist with Nomura International, argued there was a broader base for the strong export performance in January than seasonal factors.

"These data suggest that external and domestic demand are both strong, which supports our view that the economy is on track for a cyclical recovery in the first half (of this year)," he said in a research note.

China's economy expanded 7.8 percent last year, its lowest annual figure since 1999, in the face of weakness at home and in key overseas markets.

But it grew 7.9 percent in the final three months of 2012 from a year earlier as industrial output and retail sales strengthened, snapping seven straight quarters of slowing growth.

Manufacturing activity in China continued to gain traction in January, with the purchasing managers' index -- a widely watched barometer of the health of China's economy -- hitting a two-year high of 52.3, according to a survey by British bank HSBC.

Nonetheless, analysts said the upbeat but somewhat distorted January trade figures would have only limited impact on policy and warned of potential risks in overseas demand with the developed world still grappling with economic doldrums.

"We believe both export and import growth have truly bottomed out from lows in mid-2012, but we remain cautious on export growth on uncertainties and weakness in the US, eurozone and Japan," said Lu and Zhi in a research note.

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http://www.globalpost.com/dispatch/news/afp/130208/chinas-trade-surplus-surges-january