China exports top estimates with surplus at four-year high

Beijing: China’s exports rose more than estimated in November, pushing the trade surplus to the highest in more than four years in a sign global demand is helping sustain a recovery in the world’s second biggest economy.

Outbound shipments rose 12.7% from a year earlier, the General Administration of Customs said on Sunday in Beijing. That exceeded estimates from 41 of 42 analysts surveyed by Bloomberg News. The trade surplus of $33.8 billion was the biggest since January 2009, while imports gained 5.3%, compared with a median projection of 7%.

The export figures reflect pick-ups in shipments to the US, Europe and South Korea, according to customs data. Stronger demand from abroad may give Premier Li Keqiang more room to implement reforms to increase the role of markets in the economy while helping meet the 7.2% annual growth pace he says is needed to ensure stable employment.

“There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high-income countries,” Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, who previously worked at the World Bank, said in a note. “China’s exporters are benefiting from that.”

“Imports show solid expansion of China’s domestic demand, with prices declining from a year earlier,” Kuijs said.

Analysts’ estimates for export gains ranged from 2.1% to 13.2%, with a median projection of 7%. The median estimate for the trade surplus was $21.2 billion.

Stocks gain

The Shanghai Composite Index rose 0.7% last week for a fourth straight gain after the Communist Party’s 9-12 November summit in Beijing, where leaders agreed on the broadest policy shifts since the 1990s. The yuan strengthened to 6.0817 per dollar.

Overseas shipments rose 5.8% from October on a seasonally adjusted basis, compared with a 3.8% decline in the previous month, customs data showed on Sunday.

Exports to the US advanced 17.7% in November from a year earlier, the fastest pace since May 2012, while shipments to the European Union were up 18.4%, the most in more than two years, based on data compiled by Bloomberg.

China’s foreign-exchange regulator said on Saturday that it will increase scrutiny of trade financing and that banks should prevent companies from getting financing based on fabricated trade. The measures are aimed at preventing abnormal foreign- exchange flows, the State Administration of Foreign Exchange said in a statement posted on its website on Saturday and dated 6 December.

May crackdown

The latest statement follows a crackdown that began in May after trade data were inflated for several months on fake invoicing used to disguise capital inflows.

“Similar practices may be happening again, adding upward pressure on the yuan and complicating the central bank’s liquidity-management efforts,” said Chang Jian, China economist at Barclays Plc in Hong Kong.

“Year-over-year growth figures in exports overstate gains by about 1 to 2 percentage points because of last year’s over- invoicing,” RBS’s Kuijs said.

Steve Wang, chief China economist in Hong Kong at Reorient Financial Markets Ltd, said Sunday’s data don’t suggest the figures are inflated because the gains didn’t come in categories that previously correlated with suspicious practices.

Export orders

“It remains to be seen if the overseas momentum will continue, with a previous purchasing managers’ survey showing new export orders are not as strong as what people had hoped,” Wang said.

Economic growth may cool to 7.6% this quarter following a rebound in the previous period from a two-quarter slowdown, based on a Bloomberg survey last month.

Sunday’s data also showed that China, the world’s largest buyer of iron ore, increased imports of the steel-making ingredient to a record in November as traders replenished stockpiles. Robust imports of major commodities are in line with the consistently strong industrial production growth data points, Wang said.

The trade figures kick off a series of November data releases, with the statistics bureau set to report on Monday on inflation and the following day on industrial production and retail sales, along with fixed-asset investment for the first 11 months of the year. Figures on new yuan loans, aggregate financing and money supply are due from the central bank over the coming week.

Previously released surveys of purchasing managers showed this month that service-industry expansion cooled in November, while an official gauge of manufacturing was unchanged from October and a separate one from HSBC Holdings Plc and Markit Economics fell. Bloomberg

AMIT KUMAR SINGH

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