Chinese Trade Data Shows Signs Of Industrial Recovery

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Chinese Trade Data Shows Signs Of Industrial Recovery

China's imports grew at the fastest pace in more than two years in November, fueled by its strong thirst for commodities from coal to iron ore, while exports also rose unexpectedly, reflecting a pick-up in both domestic and global demand.

The upbeat data adds to signs of a modest industrial recovery in the world's largest economies, even as China and other Asian exporters brace for a potential trade war once protectionist US President-elect Donald Trump takes office.

"The improvement reflects a strengthening in global demand, with recent business surveys suggesting that developed economies are on track to end the year on a strong note," Julian Evans-Pritchard, China economist at Singapore-based Capital Economics, said in a note.

"But while global demand has recovered somewhat recently, lower trend growth in many developed and emerging economies means that further upside is probably limited."

China's November imports expanded 6.7% on-year, confounding expectations for a drop of 1.3% and the strongest gain since September 2014, data showed.

Exports rose 0.1% from a year earlier, defying predictions for a 5% slide. Demand from all of China's major trading partners improved significantly, especially Europe and the United States, though shipments to emerging economies remained weak.

That left the country with a trade surplus of US$ 44.61 billion for the month, the General Administration of Customs said, versus forecasts of US$ 46.30 billion and October's US$ 49.06 billion.

Analysts had expected a more modest drop in November exports after a 7.3% contraction in October, while imports had been seen falling at roughly the same pace.

While some analysts have worried that sharp commodity price rises could be masking still sluggish demand, the data showed imports rose in both value and volume terms.

"The debate dividing the market is whether this growth can be sustained into next year, or will things flatten out. This isn't necessarily clear just yet."

ROCKY ROAD AHEAD?

The better-than-expected trade figures cement expectations that China's government will once again meet its full-year growth target, which this year was set at 6.5-7%.

But the world's largest trading nation could be heavily exposed to protectionist measures next year if Trump follows through on campaign pledges to brand it a currency manipulator and impose heavy tariffs on imports of Chinese goods.

China is squarely in Trump's sights. Its trade surplus with the United States has widened steadily over the past years, expanding 6.5% to US$ 367.11 billion in 2015, US Census Bureau data showed.

Even if Trump does not try to impose punitive measures, growing protectionist sentiment could have a chilling effect on trade and investment worldwide.

The chief of China's sovereign wealth fund said on Thursday he expected Trump to be very careful in considering whether to increase tariffs in line with his election promises because it would not be in US interests. The United States is China's largest trading partner.

Stubbornly weak export demand has dragged on China's economic growth to the point where Beijing did not even set a trade target this year. That has forced policymakers to rely on higher government spending and record bank lending to boost activity, even at the risk of adding to a mountain of debt.

China's exports in the first 11 months of the year fell 7.5% from the same period a year earlier, while imports dropped 6.2%.