China exports snap losing streak on weaker yuan
AFP
AFP, BEIJING: Chinese exports beat expectations in November, a positive sign for the global economy, but analysts warned yesterday of an uncertain outlook as US President-elect Donald Trump prepares to take office, with Beijings trade policy in his sights.
The advance broke a seven-month losing streak and marks a sharp turnaround from the previous month helped by a plunging yuan, which made the countrys goods cheaper for overseas buyers.
Imports also beat forecasts, suggesting the worlds number two economy continues to stabilise after years of slowing growth and providing some welcome news for the countrys leaders.
Exports increased 0.1 per cent year-on-year to $196.8 billion, beating a Bloomberg News survey of economists predicting a median five per cent drop.
Rising commodity prices also lifted imports 6.7 per cent to $152.2 billion, compared with expectations of a 1.9 per cent fall. The trade surplus slipped to $44.6 billion in the month.
China is the worlds biggest trader in goods, and its performance affects partners from Australia to Zambia, which have been battered as its expansion has slowed to levels not seen in a quarter of a century.
However, it has suffered years of slowing growth and last year expanded at its weakest rate in a quarter of a century.
The readings were a massive improvement on the previous month, when exports dived 7.3 per cent and imports fell 1.4 per cent.
Stable overseas demand and a weaker Chinese currency helped, with the yuan sliding against the dollar to eight-year lows in recent weeks.
But analysts with ANZ warned that the upside surprise in exports reflected a delay in shipments from the previous two months.
Despite todays positive surprise, the medium-term outlook for Chinese trade remains challenging, said Julian Evans-Pritchard of Capital Economics in a note.
Trump fear
A broadly sluggish outlook for global growth will weigh on exports, he said, while the cooling of Chinas red-hot property market will suppress demand for imported commodities.
China also faces possible roadbumps as Trumpwho has blasted Beijing as a protectionist and has threatened to tear up global trade dealstakes office on January 20.
The billionaire-businessman-turned-politician has promised to declare China a currency manipulator and threatened to slap 45 per cent punitive tariffs on imports from the country to protect jobs.
As a warm up, he fired off two tweets Sunday blasting the countrys policies.
Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into their country (the US doesnt tax them), he demanded.
I dont think so!
China, which tightly controls the yuans movement, has in recent months steadily weakened the rate around which the currency is allowed to trade.
Last month it put it beyond 6.9 to the dollar for the first time in more than eight years as the greenback soars on expectations Trumps plans for big spending and tax cuts could force the Federal Reserve to hike interest rates.
Beijing is struggling to prop up the yuan as capital flows out of Chinas flagging economy in search of better investments in the United States.
To combat the outflows, authorities indicated this week they are lookingat relaxing restrictions on foreign investment in sectors including automotiveelectronics, mining, agricultural and chemicalproduction and some service industries.
Chinas foreign exchange reserves plunged $69 billion to a five-year low in November, according to data Wednesday, as the central Peoples Bank of China tried to support the yuan.
Earlier Customs released figures in yuan terms that showed exports expanding 5.9 per cent on-year, and imports rising 13.0 per cent.
