Chinese exports push trade surplus to 5 year high
Chinese exports for November rose to $33.8 billion, giving China its largest monthly trade surplus since January 2009, according to data from the General Administration of Customs today.
Exports for November were 12.7% higher than in November 2012, while imports increased 5.3%. Figures were higher than the forecasts of 41 out of 42 experts surveyed by Bloomberg News. Most of them had expected Chinese exports to gain by 7%.
By the end of November 2013, foreign trade for the year stood at $370.6 billion – $202.2 billion in exports and $168.4 billion in imports. The country is heading for its biggest trade balance since 2008.
Economists in North America, Europe and the Far East say this surge in Chinese exports is a sign of recovering global demand which is helping boost the world’s second-largest economy.
Chinese exports boosted by American and European demand
Surging Chinese exports were driven by strong pre-Christmas demand from Europe, the US and South Korea. Exports to the US grew by 18% in November, and also by 18% to the European Union.
Bloomberg News quoted Louis Kuijs, chief China economist at Royal Bank of Scotland Group PLC. in Hong Kong, who said “There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high-income countries. China’s exporters are benefiting from that.”
Xinhua news agency quoted Zhao Jinping of the State Council’s Development and Research Center who said that despite these encouraging data, Chinese manufacturers still face an uphill struggle because higher costs and a rising yuan are eroding their traditional competitive edges.
A report published in October by DESA, a development research division of the United Nations secretariat, suggests that China’s dominance in low cost manufacturing is about to end.
The Chinese currency, the yuan (also known as the renminbi), has appreciated in value by over 16% since 2008, from 7.3 to 6.08 per dollar today. However, since May 2013 it has only risen by 0.7%.
China’s GDP growth at 7.7% for the first nine months of this year is comfortably above the government’s target of 7.5% for 2013.
Some economists wonder how much of these latest figures were boosted by companies over-invoicing.
Market Business News reported on December 1st that the Chinese manufacturing index stood at 51.4 in November, which along with October was an 18-month record. Anything over 50 means expansion. Economists suggest this is a sign that the economy is gathering steam.
China’s service sector is also helping boost economic growth. October’s non-manufacturing Purchasing Manager’s Index reached 56.3, a 14-month high.