Chinese exports see surprise return to growth
Chinese exports unexpectedly rebounded in January, returning to growth and beating analyst forecasts, official statistics showed on Thursday.
Dollar-denominated exports rose 9.1% year-on-year, up from a 4.4% decline in December and well above analyst expectations of a decline of around 3.2%.
Imports were down 1.5%, but analysts had been looking for a far heftier fall, of more than 10%.
The unadjusted trade surplus dropped to $39.2bn from $57.1bn in December, above the consensus forecast for a surplus of around $34.3bn.
Analysts conceded that the data may be distorted by the falling of the lunar new year holiday, however.
Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said: “Gauging the trends at this time of year is tricky due to the shifting timing of Chinese New Year vacations. The year-on-year shouldn’t be as badly affected as last year, but we still reckon the seasonals are favourable. After adjustment we think real trade continued to decline, though we await January price data.
“Still, on our adjustment exports rose 2.4% month-on-month after two months of decline, while imports also bounced back. This doesn’t dent the downward trend, however, and leading indicators point to steep declines in trade in coming months.”
Michael Hewson, chief market analyst at CMC Markets, called the figures “surprisingly upbeat, given the doom and gloom surrounding [China’s] economy”.
“This strength would appear to suggest that recent stimulus measures by Chinese authorities are starting to have an effect, or they could merely be a pre-Chinese New Year boost, as demand is brought forward from the February numbers.”
Analysts at Oxford Economics said they expected exports to "remain under pressure from slow global trade and the impact of US tariffs in the coming months. But a trade agreement with the US, and prolonged tariff suspension, would be a plus”.
Officials from the US and China are currently in Beijing to discuss trade. The two countries are locked in a bitter trade dispute, with US president Donald Trump imposing tariffs on more than $200bn of Chinese imports, and China retaliating with its own tariffs on US goods.
China’s powerhouse economy has helped underpin worldwide growth in recent years. But its economy is starting to slow and economists fear the trade war will further weaken Chinese growth and by extension the wider global economy.
However, earlier this week, Trump indicated that he may extend a 1 March deadline if the talks were progressing well, which markets jumped on as a positive sign.
The Oxford Economics analysts said they believed further tariff hikes would likely be suspended, based on the positive signals from the US-China trade negotiations.
“Underlying tensions on technology and China’s industrial policy are unlikely to subside any time soon, and any agreement is likely to contain contentious language on ‘verification and enforcement’ disliked by China. Nonetheless, we think that, based on positive signals from the US-China trade negotiations, further tariff hikes will likely be suspended,” they said.