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Strong China January import-export trade shows economy's rebound intact

Feb 08 2013, 10:33 IST
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SummaryExports +25.0% y/y vs +17% forecast, imports +28.8% y/y vs +23.3% forecast, trade surplus $29.2 bn

China's exports and imports surged in January as the first hard data of the year pointed to robust domestic demand and a pick up in the economy not solely explained by the timing of the Lunar New Year holiday.

Exports grew 25 percent from a year earlier versus a forecast of 17 percent in a Reuters poll. Imports surged 28.8 percent to comfortably beat a consensus call of 23.3 percent and the resulting $29.2 billion trade surplus topped a market expectation of $22 billion.

"I think the Chinese New Year effect only explains part of the story," Zhang Zhiwei, chief China economist at Nomura in Hong Kong, told Reuters. "After controlling for the Chinese New Year, the numbers are still very strong and show the economic recovery is on track."

Investors bought that argument, lifting stock prices in Australia and South Korea despite pressure to take profits around the region ahead of next week's Lunar New Year lull, while oil and copper futures also gained ground.

Global markets have risen in anticipation of a surge in China's export growth as a signal of recovering demand in the giant economies of the United States and the European Union. Markets had also moved to factor in an easing of China's inflation, forecast at 2.0 percent in a Reuters poll from December's seven-month high of 2.5 percent.

China's year-on-year exports growth to the United States of 14.5 percent was the strongest in 10 months, while the rise in exports to the European Union were the highest in 13 months at 5.2 percent.

Exports to China's neighbouring economies in the Association of South East Asian Nations (ASEAN) leapt 48.6 percent versus January 2012, worth $20.1 billion.

External demand appeared strong, even adjusting for the five additional working days the Customs Administration said were included in its January 2013 data versus January 2012. Exports rose 12.4 percent after adjusting for the holiday factor while imports rose 3.4 percent.

China publishes the bulk of its economic data for January and February combined in March to smooth the effects of the annual shift in the Lunar New Year holidays when many factories shut for at least a week and often longer. The holiday fell in January in 2012 and will be in February this year.

DOMESTIC DEMAND STRONG

The strength of imports and what that implied for the health of the domestic economy that was most telling to Tao Wang, China economist at UBS in Hong Kong.

"It

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