China’s exports and imports surged as inflation abated in January, pointing to a rebound in external and domestic demand not solely explained by Lunar New Year holiday distortions, the first hard economic data of the year showed on Friday.
Exports grew 25% from a year earlier versus a forecast of 17% in a Reuters poll. Imports surged 28.8% to comfortably beat a consensus call of 23.3% 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.”
Other data showed that headline inflationary pressure was subdued. Consumer prices rose 2% in January from a year earlier, bang in line with expectations and down from a seven-month high of 2.5% in December.
Investors bought the argument that an economic recovery that kicked off in the last few months of 2012 was intact. Stock prices in Australia and South Korea rose, 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 US and EU.
China’s year-on-year exports growth to the US of 14.5% was the strongest in 10 months, while the rise in exports to the EU were the highest in 13 months at 5.2%. Exports to China’s neighbouring economies in the Association of South East Asian Nations (ASEAN) leapt 48.6% versus January 2012, worth $20.1 billion.
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 seems that imports were particularly strong and that reflects two things: one is that the domestic demand, in particular investment demand, is strong. The second thing is that it seems companies are restocking ahead of the Chinese New Year and the peak season in March and April,” she said.
Imports from the US soared 49.7%, those from ASEAN jumped 36.5% and imports from the EU rose 20.7%. Imports from Taiwan rocketed 74.8%, making the 12.9% rise in imports from Australia look anaemic.