China's December Exports Slowed - Rosier 2014 Predicted

By Jeff Perlah.

China's export growth slowed down more than was expected last month because of a higher comparison base a year earlier and a clampdown on speculative activities dressed up as export deals, thus failing to meet the official target on foreign trade, Reuters reported. However, as global demand increases, the 2014 outlook is predicted to be better.

"Exports weakened dramatically, but were close to the consensus. The data is positive for China and Asia sentiment as it alleviates concerns that China is slowing too sharply," Dariusz Kowalczyk, a senior economist and strategist for Credit Agricole CIB in Hong Kong, said.

Exports climbed 4.3 percent in December from the preceding year, noted the Customs Administration, easing from 12.7 percent in November and compared to market expectations of 4.9 percent, according to Reuters. Imports ascended 8.3 percent, speeding up from 5.3 percent in November and overshooting the same rate expected by the market, and that inspired the belief that domestic demand may very well hold steady even amid indications that the world's second-largest economy is losing momentum. The December trade surplus fell 24.3 percent from a year earlier to $25.6 billion, missing the forecast of $31.2 billion, the news service noted.

For 2013, exports climbed 7.9 percent and imports rose 7.3 percent, making for a trade surplus of $259.8 billion -- up 12.4 percent from 2012.

Uncertain global demand, a stronger yuan currency and rising labor costs have affected Chinese exporters, Reuters reported. However, analysts think sales can pick up to some extent this year because of increasing demand from the U.S. and Europe. China's combined exports and imports jumped 7.6 percent in 2013, missing the official target of 8 percent. In 2012, China missed a 10 percent annual growth target.

The Chinese government doesn't set a target on exports. "China's exporters are facing pressures from rising costs, including increasing labor costs and yuan currency appreciation," customs spokesman Zheng Yuesheng told a news conference. He said trade this year is entering a "stabilization and development stage."

China's Commerce Ministry has expressed its commitment to sustaining consistent trade growth in 2014 and balancing the trade structure by increasing imports of raw materials and energy products, according to reports. "The biggest surprise is December imports. This suggests China's domestic demand is continuing to improve," Sun Junwei, China economist at HSBC in Beijing, explained. "We expect exports to show further recovery in 2014, but the magnitude would be small and at around 10 percent. Imports could be supported by steady domestic demand and are likely to grow around 8 percent this year."