China's strong growth reassures market

Last updated 10:00 13/02/2014

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China's trade growth accelerated in January, possibly helping to ease fears about a slowdown in the world's second-largest economy that could dent global demand.

Imports rose 10 per cent to US$107.2 billion ($128.2 billion), up from January's 8.3 per cent growth, trade data showed on Wednesday.

Exports rose 10.6 per cent to US$126.7b, more than double the previous month's 4.3 per cent expansion.

Growth was "much stronger than we had expected", said RBS economist Louis Kuijs in a report.

"This should make markets more relaxed about both global demand and demand in China's own economy."

Last year's economic growth of 7.7 per cent was stronger than the United States, Japan or Europe but tied 2012 for China's weakest annual performance since 1999.

Growth looks set to slow further this year. That raises the risk of job losses and social tension, adding to pressure on communist leaders to shore up an expansion as they try to carry out sweeping promises of economic reforms.

Stronger exports could help to ease concern about employment in industries that employ millions of workers.

That would reduce the need for a new economic stimulus, which would set back plans to reduce reliance on state-led investment.

China's trade figures early in the year are often volatile because companies rush to fill orders before shutting down for the Lunar New Year, which falls at different points in January or February each year.

This year's data were expected to be unusually weak because during the comparison period a year earlier exporters were believed to be inflating sales figures as an excuse to evade currency controls and bring extra money into China for investment.

"With these factors holding back export growth, the performance in January, at least first glance, looks even better than the headline expansion suggests," said Julian Evans-Pritchard of Capital Economics in a report.

The country's global trade surplus narrowed by 33 per cent compared with a year earlier to US$19.5b.

Its politically sensitive surplus with the United States fell 34 per cent to US$9.2b.

The surplus with the 27-nation European Union, China's biggest trading partner, narrowed by 25 per cent to US$9.2b.

A plunge in global demand for Chinese exports prompted Beijing to launch a mini-stimulus in mid-2013 based on higher spending on railway construction and other public works.

Growth accelerated from 7.5 per cent in April-June to 7.8 per cent the next quarter but eased slightly in the final quarter of 2013 as the effect of Beijing's spending faded.

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Since then, Chinese leaders have said there is little that additional stimulus can do to spur growth and improvements will have to come from longer-term reforms.

- AP

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