Analysts who had expected the long Lunar New Year holiday to drag
on January's trade warned that the figures may be inflated by fake
trade transactions, where traders forge deals to sneak cash into the
country past capital controls.
The value of China's total exports climbed 10.6 percent in January
from a year earlier, the Customs Administration said on Wednesday,
more than five times market forecasts for a 2 percent rise.
The value of imports also jumped 10 percent from a year ago as China
bought record volumes of iron ore, crude oil and copper. That lifted
import growth to its highest level since July, handily beating
predictions for a 3 percent gain.
The country's trade surplus rose to $31.9 billion, well above
forecasts of $23.7 billion and December's $25.6 billion.
"We find this strong level of export growth puzzling," said Zhang
Zhiwei, an economist at Nomura. "It is unclear to what extent the
strong export data reflects the true strength in the economy."
A run of underwhelming economic data from China in recent weeks had
steeled investors for another disappointment on Wednesday, as
markets braced themselves for more signs that the world's
second-largest economy is losing momentum.
Fears that China may be slipping into a sharper-than-expected
slowdown were believed to have fed a fierce selloff in global
financial markets in January, with emerging markets hit particularly
As the Lunar New Year falls in January in some years and in February
in others, distorting trends early in the year, it may be months
before investors see data which offers more reliable clues on the
economy's true direction.
Still, Asian investors welcomed the trade data and pushed stock
prices higher for the fourth straight session. An optimistic
economic outlook from new Federal Reserve Chair Janet Yellen also
A resilient Chinese economy is good news for the world, particularly
for major commodity exporters such as 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
Economists expect China's economy to grow at its slackest pace in 14
years this year at 7.4 percent. But even then, it is still expected
to add twice as much demand to the world economy than the United
States, HSBC said.
"Looking ahead, improving conditions in developed economies should
continue to support Chinese exports," said Julian Evans-Pritchard,
an economist at Capital Markets in Singapore.
[to top of second column]
But not all economists were so upbeat. Many struggled to explain the
unexpectedly buoyant trade figures, especially since Taiwan and
South Korea both saw export sales slump in January, when the Lunar
New Year holiday reduced the number of working days.
Four separate purchasing managers' indices also showed China's
factory and services sectors sliding to multi-month or multi-year
lows in January as export and domestic orders fell.
Even arguments that China's export growth in January was
artificially lifted by bogus trade deals were not supported by data
at face value.
Export growth to Hong Kong, whose close proximity to China has made
it a favorite destination for fake transactions in the past, fell 18
percent in January, compared to December's 2.3 percent rise.
Analysts also found it hard to explain China's record purchase of
raw materials in January as underlying demand has not shown any
convincing signs of a pick-up.
Indeed, the level of China's iron ore stockpiles is at its highest
in nearly 1-1/2 years, lending weight to arguments that the jump in
imports was down to China stockpiling before the Lunar New Year
China's biggest annual holiday, the Lunar New Year usually dampens
economic activity as factories and offices close shop for long
periods before and after the festivities.
Although China's economic data is in theory adjusted for seasonal
factors to smoothen out fluctuations due to events such as holidays,
most experts do not agree on the best method for seasonal
adjustments and do their calculations differently.
"Every time we think we understand what the Chinese New Year effect
is, we will hear later that there has been some adjustments," said
Louis Kujis, an economist at RBS.
"It's fair to say that this should not make people more nervous
about global demand and China's economy, but I also think we have to
keep on scrutinizing the data and wondering how much this really
(Reporting by Shao Xiaoyi and Koh Gui Qing;
editing by Kim Coghill)
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