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Exports expand in August as economy recovers

Shanghai Daily, September 9, 2013

• A "god of fortune" extends his good wishes at a ceremony to mark the start of the 17th China International Fair for Investment and Trade on Sunday in the coastal city of Xiamen, Fujian province. More than 670 delegations from 100 countries and regions are attending the fair. [China Daily]

  China's exports growth accelerated last month, adding to signs the economy is recovering as external demand picks up.

  Exports rose 7.2 percent to US$190.7 billion in August, after a 5.1 percent gain in July, the General Administration of Customs reported yesterday.

  Imports rose a less-than-expected 7 percent to US$162.1 billion last month, leaving the country with a trade surplus of US$28.6 billion, the highest this year.

  The surplus was 8.4 percent up on the same month of last year, the Customs said, and widened from July's US$17.8 billion.

  "The surplus is higher than expected thanks to strong exports. The figures are good and show an upward trend in China's trade," Liao Qun, an economist at Citic Bank International, told AFP.

  "China's export markets began to grow strong again as the United States is back on track and Europe is stabilizing," he said.

  China's gross domestic product growth slowed to 7.5 percent in the second quarter, but there were signs of recovery in recent months after policy-makers announced measures to support the economy, such as quicker railway investment and tax incentives for China's small businesses.

  Improvements in overseas markets, particularly in developed economies, are expected to support China's exports in the coming months, economists say.

  Shipments to the United States, China's largest market, rose 6.1 percent in August from a year earlier, while those to the European Union, the second-largest, gained 2.5 percent, the Customs said. Both marked the second monthly gain after a four-month drop.

  Exports to Japan, however, fell 2.2 percent in August, declining for the seventh straight month.

  Domestic demand

  The below-forecast import growth in August showed a "moderate payback" after July's significant gain, JPMorgan chief China economist Zhu Haibin said.

  But weak imports could still be a sign of worry for the economy, signalling that domestic demand is faltering, analysts said.

  "The import figure is lower than expected, indicating that the demand from the domestic market is not that strong," Ma Xiaoping, a Beijing-based economist for British bank HSBC, told AFP.

  "However, there is no need to worry too much, as the effect of stimulus policies revealed earlier this year and the rebound in domestic demand will take time to realize," she added.

  While the government has announced a series of support measures, it has resisted calls for major stimulus.

  China's leaders have signaled they could tolerate slower growth as they seek to reform the structure of economy to make it more efficient and sustainable — with less reliance on investment, credit and exports. But they also need a stabilizing economy to avoid any sharp downturn.

  In July, the State Council approved a free trade zone in Shanghai for economical and financial reform trials.

  "The Shanghai free trade zone will no doubt help China curb downturn in imports and exports, stabilize its economy, stimulate the financial and shipping markets," said Zhang Shengkun, president of the Shanghai Society of Naval Architects and Ocean Engineers.

  China's central bank has also reined in the appreciation of yuan to help exporters.

  August's trade surplus suggested that appreciation pressure on the Chinese currency is likely to continue in the foreseeable future, ANZ economists said.

  Even so, with market turbulence in emerging economies, especially in India and Indonesia, it is likely that the People's Bank of China will maintain stability of the yuan's exchange rate.

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