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China's trade surplus widened last month to the largest in more than four years as exports exceeded estimates, in a sign global demand is helping sustain a recovery in the world's second-biggest economy.
The surplus of $33.8 billion was the biggest since January 2009, data from the General Administration of Customs showed in Beijing on Sunday. Outbound shipments rose 12.7 per cent from a year earlier, topping projections from 41 of 42 analysts surveyed by Bloomberg News, while import gains of 5.3 per cent compared with a median projection of seven per cent.
The data reflect pick-ups in shipments to the US, Europe and South Korea. Stronger demand from abroad may give Premier Li Keqiang more room to implement reforms to increase the role of markets in the economy and meet a goal of reducing the nation's reliance on exports in favour of domestic consumption.
"There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high-income countries," Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, who previously worked at the World Bank, said in a note. "China's exporters are benefiting from that."
While Kuijs said imports show "solid expansion of China's domestic demand" with prices declining from a year earlier, economist Chang Jian at Barclays Plc said the inbound shipments "suggest softer domestic demand".
Inflation figures
The trade figures kick off a series of November data releases, with the statistics bureau set to report on Monday on inflation and the following day on industrial production and retail sales, along with fixed-asset investment for the first 11 months of the year. Figures on new yuan loans, aggregate financing and money supply are due from the central bank over the coming week.
Analysts' estimates for export gains ranged from 2.1 per cent to 13.2 per cent, with a median projection of seven per cent. The median estimate for the trade surplus was $21.2 billion, after a $31.1 billion excess in October.
The Shanghai Composite Index rose 0.7 per cent last week for a fourth straight gain after the Communist Party's Nov 9-12 summit in Beijing, where leaders agreed on the broadest policy shifts since the 1990s. The yuan strengthened to 6.0817 per dollar.
Overseas shipments rose 5.8 per cent from October on a seasonally adjusted basis, compared with a 3.8 per cent decline in the previous month, customs data showed on Sunday.
US shipments
Exports to the US advanced 17.7 per cent in November from a year earlier, the fastest pace since May 2012, while shipments to the European Union were up 18.4 per cent, the most in more than two years, based on data compiled by Bloomberg.
China's foreign-exchange regulator said December 7 that it will increase scrutiny of trade financing and that banks should prevent companies from getting financing based on fabricated trade. The measures are aimed at preventing abnormal foreign- exchange flows, the State Administration of Foreign Exchange said in a statement posted on its website December 7 and dated December 6. The latest statement follows a crackdown that began in May after trade data were inflated for several months on fake invoicing used to disguise capital inflows.
Similar practices may be happening again, adding upward pressure on the yuan and complicating the central bank's liquidity-management efforts, said Chang of Barclays, who's based in Hong Kong.
Year-over-year growth figures in exports overstate gains by about 1 to 2 percentage points because of last year's over- invoicing, RBS's Kuijs said.
Momentum question
Steve Wang, chief China economist in Hong Kong at Reorient Financial Markets Ltd, said Sunday's data don't suggest the figures are inflated because the gains didn't come in categories that previously correlated with suspicious practices.
It remains to be seen if the overseas momentum will continue, with a previous purchasing managers' survey showing new export orders are "not as strong as what people had hoped," Wang said.
Economic growth may cool to 7.6 per cent this quarter following a rebound in the previous period from a two-quarter slowdown, based on a Bloomberg survey last month.
Sunday's data also showed that China, the world's largest buyer of iron ore, increased imports of the steel-making ingredient to a record in November as traders replenished stockpiles. "Robust imports of major commodities are in line with the consistently strong industrial production growth data points," Wang said.
