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China trade performance improves on stronger exports

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(Globalpost/GlobalPost)

China's trade performance was better than expected in August, as stronger exports to recovering overseas economies caused the trade surplus to widen to $28.5 billion, customs figures showed Sunday.

Improved exports, a key driver of growth for China, are a positive sign for the world's second largest economy, which has struggled since early this year, analysts said.

The trade surplus rose 8.4 percent from the same month last year, customs said in a statement on its website, revising figures given earlier on Sunday. The surplus also widened from $17.8 billion in July.

Analysts had forecast a trade surplus of $20.4 billion, according to a survey of 11 economists by Dow Jones Newswires.

"The surplus is higher than expected thanks to strong exports. The figures are good and show an upward trend in China's trade," Liao Qun, an economist at Citic Bank International, told AFP.

"China's export markets began to grow strong again as the United States is back on track and Europe is stabilising," he said.

Exports jumped 7.2 percent year-on-year to $190.6 billion last month, customs said in a statement on its website, revising figures given earlier on Sunday without explanation.

Economists had forecast a 6.0 percent annual rise in exports for August, Dow Jones Newswires said. In July, exports grew just 5.1 percent on the year.

"China's August trade sustained the upward trend seen since July, in line with accelerating growth momentum and improving market sentiment," bank ANZ Group said in a research report.

But pressure on the yuan to appreciate was likely to continue on hefty trade surpluses and central bank intervention, it said.

Besides weak demand, China's exports have also been hurt by appreciation of the yuan, which makes its products more expensive overseas, analysts say.

Separately, imports rose a weaker-than-expected 7.0 percent to $162.1 billion in August, less than the 11.7 percent rise forecast by analysts.

Weak imports could still be a sign of worry for the economy, signalling that domestic demand is faltering, analysts said.

"The import figure is lower than expected, indicating that the demand from the domestic market is not that strong," Ma Xiaoping, a Beijing-based economist for British bank HSBC, told AFP.

"However, there is no need to worry too much, as the effect of stimulus policies revealed earlier this year and the rebound in domestic demand will take time to realise," she said.

The market is watching for signs of recovery in China, which the global economy relies on to sustain growth.

China's economy expanded 7.7 percent last year, the slowest growth since 1999.

In the final quarter of last year, growth accelerated to 7.9 percent, but has slowed in successive quarters to 7.7 percent in the first quarter and 7.5 percent in the second quarter.

However, China's manufacturing activity strengthened in August to its highest level in 16 months, official figures showed, with the closely watched purchasing managers' index (PMI) rising to 51.0 from 50.3 in July.

Another PMI measure released by HSBC rebounded to 50.1 in August, its first month of expansion since April. A reading below 50 indicates contraction, while anything above signals expansion.

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http://www.globalpost.com/dispatch/news/afp/130908/china-trade-performance-improves-stronger-exports-0