China – economy picks up

Exports from China were greater than estimates had predicted, suggesting that the country is rebounding after a six-month slowdown.

According to the General Administration of Customs, shipments from China abroad increased by 7.2% in August, compared to August 2012.

Bloomberg News reported that 46 economists had predicted exports would have risen by 5.5% in August.

In July exports had risen by 5.1% and shrunk by 3.1% in June. Imports increased 7% in August compared to August 2012. In July, imports had risen by 10.9%.

China had a trade surplus of $28 billion in August 2013, the highest it has seen all year.

China – today seen as a barometer of the global economy

China is the largest exporter in the world, and also usually the first major economy to release monthly trade data. Its published figures are carefully watched by analysts in other countries, who interpret information coming out of China as a barometer for the overall global economy.

Li Keqiang, Premier of the People’s Republic of China announced higher expenditures on railways as well as tax concessions for small businesses as part of the government’s push for greater economic growth after the interbank tightening in June.

August saw the second consecutive month of increased exports from China to both the United States and the European Union.

China stocking up on raw materials

The Wall St. Journal (WSJ) reported that China is also continuing to stock up on raw materials for its industrial sector. The WSJ quoted Stephen Green, of Standard Chartered Bank, who said “China’s back! It won’t be a strong recovery but it’s increasingly clear we’ve bottomed.”

Although economists expressed optimism regarding China’s current situation, some continue to question the sustainability of the current turnaround. China now has higher labor costs as wages have increased, and its currency is stronger – both factors that may undermine the competitiveness of its exports.

Add to this the government’s recent moves to control lending growth after years of expanding credit.