China exports surge tainted by fears of trade turmoil

'The exports outlook for China is good, except for the potential risk of a Sino-US trade war'

Afp February 10, 2017
The amendment comes after the People’s Bank of China (PBoC), the central bank, announced Tuesday it was cutting benchmark interest rates. PHOTO: AFP

BEIJING, CHINA: 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 percent on-year to $182.8 billion, easily outstripping the 3.2 percent tipped in a survey of economists by Bloomberg News. It also reversed December's 6.1 percent plunge.

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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 percent to $131.4 billion, compared with an expected 10 percent 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 all businesses close.

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Mizuho Securities Asia chief Asia economist Shen Jianguang told Bloomberg News: "The strong data was related to the global pick-up in growth in the US, Europe and also emerging economies."

But the reading could be a precursor to a frictions with Washington as Trump settles into the White House, seemingly 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 yuan is wallowing near eight-year lows against the dollar as investors, frightened by a weaker Chinese economy and the prospect of better returns in the US, withdraw their cash from the country.

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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 angering Beijing by questioning the policy that underpins Sino-US relations.

Nevertheless Shen said: "The exports outlook for China is good, except for the potential risk of a Sino-US trade war," he said.


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