By BLOOMBERG
China’s trade surplus widened and exports recovered last month, offering support to a weakening currency that has roiled global markets this year.
The nation’s trade balance widened to US$60 billion (RM263.5 billion), taking the full-year tally to US$594.5 billion, helping offset capital outflows that have pressured the yuan. Exports slid 1.4% in US dollar terms in December from a year earlier, while rising when counted in the local currency.
The Australian dollar and S&P 500 Index futures climbed after the report. China’s tumbling shares and weakening currency have shaken global markets in 2016, eroding confidence in an economy that’s struggling to stabilise after it likely grew last year at the slowest pace in a quarter of a century.
“The Chinese economy is stabilising rather than collapsing,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors Ltd in Sydney, adding that the trade surplus weakens the case for a substantial yuan depreciation. “Last week’s renewed share market turmoil in China owed more to regulatory issues around the share market than telling us much about the state of the Chinese economy.”
Exports climbed 2.3% in yuan terms from a year earlier, the customs administration said on Wednesday, compared with a 3.7% drop in November. Imports extended a stretch of declines to 14 months, falling 4% in yuan terms, compared with a 5.6% drop a month earlier. In US dollar terms, imports fell 7.6% from a year earlier, less than the 11% drop forecast by economists.
The MSCI Asia Pacific Index climbed 2% as of 12.55pm Hong Kong time, halting a seven-day drop that marked its longest run of losses since August. The yuan strengthened in Hong Kong’s offshore market, where it was headed for the biggest five-day advance on record.
A sustained pick up in exports may relieve some of the pressure on the yuan to weaken, countering capital outflows and concern over the economy’s slowdown.
Recovery signs
“This could be the beginning of an improvement in China’s trade data,” said Ding Shuang, chief China economist at Standard Chartered Plc in Hong Kong. “When the exchange rate starts to move it usually takes about three to six months for trade data to respond. Last August was the beginning, so it makes sense for the trade data to respond after three to four months. ”
Going forward, Ding expects a “very stable” effective exchange rate against a basket of currencies. “That will help China to regain competitiveness,” he said.
China imported a record amount of crude last year as oil’s lowest annual average price in more than a decade spurred stockpiling and boosted demand from independent refiners.
The world’s largest energy consumer increased imports by 8.8% to a record 334 million metric tonnes (about 6.7 million barrels a day) in 2015, according to preliminary data released by the Beijing-based General Administration of Customs on Wednesday.
Seasonal jump
The increase in exports last month may prove to be a temporary one due to a seasonal jump at the end of the year and it doesn’t represent a trend, a spokesperson for the customs office said after a briefing in Beijing.
Exports to Hong Kong rose 10.8% and those to the UK jumped 19.6% in US dollar terms.
“There will be some front-loading of shipments before the Chinese New Year, but that boost could fizzle again quickly thereafter,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “Exports are unlikely to deliver a growth impulse this year to China and the rest of Asia. It’s all about domestic demand. Don’t look to the external side to pull Asia out of its growth malaise.”
— By Bloomberg News
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