BUSINESS

CHINA ON TRACK FOR BIG TRADE SURPLUS AFTER EXPORTS SURGE

Staff Writer
Columbus CEO

c.2013 New York Times News Service

HONG KONG — China’s exports rose more than expected last month, government figures released Sunday showed, as resurgent demand from consumers in the United States and the European Union helped put the Asian manufacturing juggernaut on track for its biggest annual trade surplus since 2008.

China’s exports of goods rose 12.7 percent in November compared with a year earlier, while imports increased 5.3 percent, resulting in a trade surplus for the month of $33.8 billion, according to data from the General Administration of Customs.

The reported export growth outpaced expectations for a 7.1 percent increase, while the rise in imports was slightly less than the 7.2 percent economists had forecast, according to the average estimates from a survey of economists conducted by Thomson Reuters.

Analysts said that although the yearly comparison figures were partly bolstered by companies’ overinvoicing — an anomaly of Chinese trade data — the underlying export trends were encouraging.

“The year-on-year growth data overstates the actual export momentum,” Louis Kuijs, the chief China economist at the Royal Bank of Scotland in Hong Kong, wrote Sunday in a research note. “Nonetheless, there are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high-income countries, and China’s exporters are benefiting from that.”

Improving demand in the West for Chinese goods saw growth in shipments to key trading partners outperform expectations. China’s exports to the United States rose 17.3 percent last month, while shipments to the European Union rose 18.5 percent, customs data shows.

As a result, China’s trade surplus is soaring to levels not seen in years — a development that could draw scrutiny from Western trading partners.

Liu Li-Gang, the chief economist for greater China at the Australia and New Zealand Banking Group, wrote Sunday in a research note that China’s trade surplus was likely to exceed $240 billion this year, the highest level since 2008.

This, Liu wrote, is “contrary to the fact that renminbi appreciation has significantly eroded trade competitiveness.” A stronger currency makes the goods that Chinese manufacturers export relatively more expensive to foreign buyers.

China’s currency has risen more than 16 percent against the dollar over the past five years, strengthening to about 6.08 renminbi per dollar now from around 7.3 per dollar at the beginning of 2008.

The stronger currency, coupled with rising wages at home and weak demand from overseas, have made profitability more difficult for Chinese manufacturers and trading firms in recent years. For example, shares in Li & Fung, the Hong Kong merchandiser that is one of the biggest sourcing agents in the world, are down around 25 percent this year, compared with a 4.8 percent rise in the benchmark Hang Seng Index.

Still, appreciation of the currency has slowed dramatically in recent months, which could be seen as contributing to China’s growing trade surpluses. The renminbi has strengthened only about 0.7 percent against the dollar since May.

Analysts were quick to caution that China’s monthly trade figures could not be taken entirely at face value.

Chinese officials have been working in recent months to compile more accurate trade figures after having reported widely aberrant monthly export and import data early this year and late last year — irregularities that analysts have said were due to companies seeking to evade taxes, known as “round-tripping,” or to disguise capital inflows to China by falsifying the invoiced value of the goods they were shipping abroad.

“The data in January-November suggest that China could achieve the 8 percent trade growth target for the whole year,” Liu wrote. “However, we cannot be overly optimistic, as the overinvoicing and round-tripping clearly inflated export growth in the first half of the year.”