China’s export growth slowed more than expected in December due to a higher comparison base a year earlier and a clamp-down on speculative activities disguised as export deals, missing the official target on foreign trade.
But the outlook for 2014 is expected to be brighter as global demand picks up, giving more wiggle room for Chinese leaders to push through reforms to balance the world’s second-largest economy.
“Exports weakened dramatically, but were close to the consensus. The data is positive for China and Asia sentiment as it alleviates concerns that China is slowing too sharply,” said Dariusz Kowalczyk, a senior economist and strategist for Credit Agricole CIB in Hong Kong.
Exports rose 4.3 percent in December from a year earlier, the Customs Administration said on Friday, slowing from 12.7 percent in November and compared to market expectations of 4.9 percent.
Imports rose 8.3 percent, quickening from 5.3 percent in November and overshooting the same rate expected by the market, raising optimism that domestic demand may remain firm despite signs that the world’s second-largest economy is losing steam.
The December trade surplus fell 24.3 percent from a year earlier to $25.6 billion, missing the forecast of $31.2 billion.
Exports to the United States rose 3 percent in December from a year earlier, while sales to the European Union rose 3.9 percent and those to Japan climbed 5.5 percent, according to official figures.
For 2013, exports rose 7.9 percent and imports rose 7.3 percent, producing a trade surplus of $259.8 billion, up 12.4 percent from 2012.
China’s combined exports and imports rose 7.6 percent in 2013, below the official target of 8 percent. In 2012, China missed a 10 percent annual growth target. The government does not set any target on exports.
Uncertain global demand, a stronger yuan currency and rising labor costs have taken their toll on Chinese exporters, but analysts believe sales could pick up modestly in 2014 due to improved demand from the United States and Europe.
“China’s exporters are facing pressures from rising costs, including increasing labour costs and yuan currency appreciation,” customs spokesman Zheng Yuesheng told a news conference, adding that trade is entering a “stabilisation and development stage” in 2014.
“The strengthening recovering of developed economies will likely gradually lead the global economy out of the financial crisis, which will improve the external environment of China’s exports,” said Zheng.
China’s Commerce Ministry has pledged to maintain steady trade growth this year and further balance its trade structure by increasing imports of raw materials and energy products.
“The biggest surprise is December imports. This suggests China’s domestic demand is continuing to improve,” said Sun Junwei, China economist at HSBC in Beijing.
“We expect exports to show further recovery in 2014, but the magnitude would be small and at around 10 percent. Imports could be supported by steady domestic demand and are likely to grow around 8 percent this year.”
Li Jian, head of foreign trade research of the Chinese Academy of International Trade and Economic Cooperation - the Commerce Ministry’s think tank, has also predicted 2014 export growth of around 10 percent.
The government is due to issue fourth-quarter gross domestic product data on Jan. 20. A Reuters poll showed annual GDP growth could slow to 7.6 percent in the fourth quarter, putting 2013 growth on track for the weakest showing in 14 years.
Chinese leaders have pledged reasonable growth in 2014, and sources at top government think tanks told Reuters they expect a growth target of 7.5 percent, the same as for 2013.
China’s leaders want to wean the economy off its heavy reliance on investment and exports in favour of a more sustainable expansion in consumption and have unveiled the boldest economic and social reforms in nearly three decades to pursue that goal. (Reuters)