China Dec exports beat expectations, but pressures persist

Trade surplus at $49.6 billion for the month, exports rise 9.7%

China's exports and imports exceeded market expectations in December, a welcome sign that Beijing has found support for its cooling manufacturing sector as a stronger US economy offsets weakness in Europe and Japan.

Policymakers are trying to steer the world's second-largest economy through a soft patch as it also confronts weak consumption and a slowdown in the property market.

Exports rose 9.7% from a year earlier in dollar-denominated terms, official data showed, while imports dropped for a second month in a row by 2.4%.

That left the country with a trade surplus of $49.6 billion for the month, data from the General Administration of Customs showed on Tuesday.

The country's combined imports and exports last year grew 3.4%, missing the government's annual target of 7.5% growth for net trade.

The Ministry of Commerce had earlier predicted exports would fall short, due to negative surprises in the second half.

"We think the negative factors that crimped trade performance in 2014 will be sustained for a period of time," said Zheng Yuesheng, a spokesman for the customs office.

China has been long awaiting a turnaround in its exports to be accompanied by a rise in imports, given that much of its trade surplus has been the result of falling imports - more a worrying indicator of weak demand at home, instead of strong demand abroad.

At the same time, falling costs for imported commodities and energy is seen as having mixed effects on the Chinese economy. Lower prices potentially help some manufacturers and service providers, but risk exacerbating deflationary pressures.

Earlier data showed that China's annual consumer inflation hovered at a near five-year low in December, signalling persistent weakness in the economy but giving policymakers more room to ease policy to support growth.

The trade surplus might provide some support for the yuan, but the currency has been on a long slide in the aftermath of a surprise cut to interest rates in November.

That weakness, driven in large part by a rallying dollar and rising yields in offshore assets, has given mild relief to exporters, although the central bank has said it will maintain fundamental stability in the exchange rate. Most economists see the exchange rate as only a minor factor in China's export competitiveness.

Economists polled by Reuters had estimated exports in December would accelerate to 6.8% from a year earlier from 4.7% in November, while imports were forecast down 7.4%, following a 6.7% drop in November.

The customs bureau earlier provided trade figures based on yuan terms, but later issued%age figures in dollar terms.