Chinese Exports Return to Growth

Discussion in 'Economics' started by ASusilovic, Jan 10, 2010.

  1. BEIJING -- China's exports surged in December from a year earlier, ending 13 months of declines. Despite the rebound in external demand, however, the country's annual trade surplus dropped for the first time in six years as the global financial crisis hit home.

    The surprising rally in imports, up 56% last month, came as China's crude-oil imports hit a record monthly high and its iron-ore imports were the second highest on record, signaling strong domestic demand as the government's stimulus package helped revive the national economy.

    The sharp improvement in China's trade last month -- the top trading partner for many countries and the world's largest exporter –s hould give a lift to investor confidence that the world's third largest economy behind the U.S. and Japan will continue to hold up demand as the rest of the global economy gets back on its feet.

    It also flags the chance that China's economy expanded at a double-digit, year-to-year growth rate in the fourth quarter of last year, compared with an 8.9% expansion made in the third quarter, and stoking the debate among Chinese policymakers about a timing for exit strategies from Beijing's expansionary policies.

    "Growth in exports is expected to be strong in the coming months due to steady improvement in external demand combined with low base effects. Continued recovery in China's industrial sector should support increased demand for energy and raw material imports," said Jing Ulrich, chairman of China equities and commodities at J.P. Morgan.

    The yuan may have an excuse to strengthen from the end of the current quarter as China's exports grow again, said Royal Bank of Canada Capital Markets senior strategist Brian Jackson. Critics say Chinese exporters enjoy an unfair advantage in global markets because the yuan is undervalued as it pretty much tracks the movements of the U.S. dollar.


    For 2009 as a whole, China's exports were down 16% at $1.202 trillion, while imports slid 11.2% to $1.006 trillion, customs said.