Tags: China | export | growth | recovery

China's Export Growth Accelerates in Boost to Recovery

Sunday, 08 September 2013 11:13 AM

China’s exports increased more than estimated in August, adding to evidence the world’s second-largest economy is rebounding after a two-quarter slowdown.

Overseas shipments rose 7.2 percent from a year earlier, the General Administration of Customs said in Beijing Sunday. That compares with the 5.5 percent median estimate of 46 economists surveyed by Bloomberg News and July’s 5.1 percent gain. Imports rose a less-than-estimated 7 percent from a year earlier, leaving a trade surplus of more than $28 billion.

China’s economy is showing signs of picking up after the government announced support measures such as tax cuts for small businesses and extra spending on railways, and as confidence returns after the interbank cash squeeze in June. Improvements in developed nations may support exports in coming months, with the euro-area returning to growth in the second quarter after a record-long recession.

“We’re clearly seeing stronger external demand momentum as manufacturing in the U.S. and European Union recover and that’s going to become a stronger driver of China’s growth,” said Xu Gao, chief economist with Everbright Securities Co. in Beijing, who previously worked for the World Bank. “But if policy makers in China see this recovery as meaning they don’t need to add stimulus domestically or even withdraw stimulus, that could be bad news.”

Clearer Picture

Xu, who last week raised his 2013 full-year economic growth estimate for China to 7.6 percent from 7.5 percent, said the moderation in momentum suggested in the August import numbers may temper optimism about the strength of domestic demand.

August data for consumer and producer prices will be released tomorrow, followed by industrial output, retail sales and January-August fixed-asset investment on Sept. 10 that will give a clearer picture of the extent of the economic rebound that started in July. The People’s Bank of China will also give August lending, money supply and aggregate financing numbers this week.

The increase in August inbound shipments trailed the 11.3 percent median projection in a Bloomberg survey of 45 analysts and was lower than July’s 10.9 percent jump. Estimates ranged from a gain of 5 percent to 15 percent.

The slowdown “reflects the weak economic recovery domestically,” said Hu Yifan, chief economist at Haitong International Securities Group in Hong Kong. “But we expect the trend to reverse in coming months, along with rising demand, on a series of supportive policies” announced by the government, she said.

Japan Decline

Exports to the U.S., China’s biggest market, and the European Union, its second-largest, rose for a second month in August after a four-month drop, Sunday’s data showed. Sales to the U.S. increased 6.1 percent from a year earlier, while those to the EU gained 2.5 percent. Exports to Japan declined for the seventh straight month, falling 2.2 percent from a year earlier.

The U.S. Federal Reserve said last week that the world’s biggest economy maintained a “modest to moderate” pace of expansion, and a manufacturing index from the Institute for Supply Management rose to a two-year high. In the euro area, an index of services and factory output for August climbed to the highest level since June 2011 and economic confidence jumped to a two-year high.

Improvements in overseas demand are helping Chinese exporters such as JinkoSolar Holding Co. based in Shangrao, Jiangxi province, which shipped 62 percent more panels in the second quarter than a year earlier. The company also raised its shipment forecast for 2013, Chief Executive Officer Chen Kangping said on an Aug. 14 earnings call.

Maintain Confidence

Goldman Sachs Group Inc. last week raised its estimate for China’s economic growth in the third and fourth quarters, citing improving global demand and a stronger-than-expected domestic industrial recovery. JPMorgan Chase & Co., Deutsche Bank AG and Credit Suisse Group AG also raised their growth forecasts over the past month, bolstering confidence Premier Li Keqiang will meet the government’s 7.5 percent target for expansion this year.

Chinese leaders are seeking to maintain confidence in the nation’s economy and growth prospects. Speaking at a summit of leaders from the Group of 20 nations in St. Petersburg, Russia last week, President Xi Jinping said China’s “economic fundamentals are sound” and that the government chose slower growth to focus on structural reforms hindering long-term development. Li said last week the government can meet its economic goals this year.

Shanghai Reforms

In addition to speeding up investment in infrastructure such as railways and subways, the government has cut taxes, boosted support for industries including energy conservation, environmental protection, technology and health. The State Council in July approved a free trade zone in Shanghai to trial economic and financial reforms targeted at services industries.

The central bank has also reined in yuan appreciation to help exporters. The Chinese currency increased only about 0.3 percent against the U.S. dollar in the past three months, slowing from a gain of about 1.5 percent in the first half of the year and about 2 percent in the second half of last year.

China’s trade surplus in August was $28.61 billion, according to a customs administration statement Sunday, while a separate table put the excess at $28.52 billion. Calls to the agency’s press office to clarify the discrepancy weren’t answered.

The January-to-August trade surplus widened 28 percent from a year earlier to $154.2 billion, according to Sunday’s data, and was the highest for that period since 2007.

The pickup in the surplus suggests that appreciation pressure on the yuan will continue, economists Liu Li-Gang and Hao Zhou at Australia & New Zealand Banking Group Ltd. said in a note after the release. Even so, with turbulence in emerging market economies, especially India and Indonesia, the central bank is likely to maintain stability of the exchange rate, they wrote.

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China's exports increased more than estimated in August, adding to evidence the world's second-largest economy is rebounding after a two-quarter slowdown.
Sunday, 08 September 2013 11:13 AM
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