China’s December trade data hint at stabilizing global demand, though the outlook is less clear

January 10, 2013
January 10, 2013

China’s unexpectedly high December exports, which jumped 14% year-on-year, suggest recovering overseas demand, as they drove China’s trade surplus to $31.6 billion, a more than 60% increase on last month. December also saw a rise in imports, which grew 6% over the year earlier.

The 2012 export data are strong enough that they should quell concerns about a “hard landing.” However, the heavy weighting of commodities behind the import boost could mean that China has made little headway in weaning its growth off exports in favor of domestic consumption. Markets, however, took the data as good news—the ASX, the Shanghai Composite and other regional stock indices rose, as did the Australian dollar and the yuan.

Among emerging markets, Southeast Asian demand for Chinese exports rose 27.8% from a year earlier. Raw figures for the US and European Union markets as a whole weren’t as exciting, but reversed November’s losses, with exports to the US rising 10.3% after a 2.6% contraction, and shipments to the EU rising 2.3% after falling 18%. Exports to the UK increased 18.2%, according to Moody’s Analytics—heartening news amid worries the UK could be sliding into a “triple-dip” recession.

Even better news for the US was that its imports to China rose 15%, outpacing China’s overall rise in imports. Otherwise, the import increase was largely driven by China’s appetite for commodities. Iron ore reaching a record high of 70.9 million tons in December, up 7.8% from November, while soybean imports rose 11.2% from a year earlier. Copper imports, however, fell 6.6% from November. Japan was the notable exception to the growth picture, as a territorial dispute over uninhabited islands pushed down Chinese imports of Japanese goods by 19.5% and saw Chinese exports to Japan fall 7.3%.

High-tech trade represented a key part of December’s trade activity, with Chinese exports up 23% and imports rising 19.4%. Fred Gibson, economist with Moody’s Analytics, linked this to new smartphone models, such as the iPhone 5.

In other data released today, the country’s foreign reserves—the world’s largest—registered their smallest annual growth since 2003. Financial data also showed that bank lending unexpectedly slid 13% from November, but a broader measure of financing that includes trust companies and bond issuance rose 43%.

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