China February exports surge, supports recovery hopes
BEIJING (Reuters) - China's exports soared past forecasts to jump by a fifth in February from a year ago, a sign the country's modest economic revival is intact and suggesting global demand may also be on the mend.
But underlining expectations that China's recovery is fragile and vulnerable to a wobbly world economy, Chinese imports were surprisingly weak, falling 15.2 percent from a year earlier to 13-month lows, customs data showed on Friday.
And some analysts suggested exporters may have overstated their business to sneak funds into the country and avoid capital restrictions, an argument backed up by figures showing rising money inflows into China and weak trade reports elsewhere.
Still, on balance, most analysts were upbeat about the figures, suggesting they indicated a modest pick up in economic growth in the fourth quarter of 2012 had extended into 2013.
"We are impressed by China's ability to expand its exports so strongly despite muted external environment," said Dariusz Kowalczyk, a senior economist at Credit Agricole CIB in Hong Kong. "The data is positive for sentiment."
Exports rose 21.8 percent in February from a year earlier and were 20.6 percent higher on a calendar adjusted basis. Exports growth to the United States was the strongest in a year and to the euro zone it was the highest in 18 months.
Due to China's long Lunar New Year holiday, which falls either in January or February depending on the year and during which many factories are shut, analysts warn against reading too much into one month's data because of seasonal distortions.
However, the strength in China's exports is apparent even when their January and February performances are combined.
Exports for the two months combined rose 23.6 percent, while imports increased 5 percent, the customs office said. That compared with expectations for rises of 17.6 percent and 10.0 percent, respectively.
China's Commerce Minister Chen Deming said on Friday he was hopeful that the country's export sales would improve this year.
"I myself am optimistic that trade growth will exceed last year's 6.2 percent," Chen said without giving a forecast. He was speaking at a briefing on the sidelines of China's annual parliament session.
The stronger exports figures were also borne out by comments from Ningbo Port Group, China's third-largest port operator located in the heart of the export-orientated Yangtze River Delta manufacturing hub.
"Our data in the first two months shows the foreign trade situation is improving," Chairman Li Linghong told Reuters ahead of the trade data.
Ningbo port's container volumes rose 13.6 percent in January and February from a year earlier and cargo volumes increased 12.4 percent, Li said.
"Usually the first two months are a peak season for companies to deliver orders, but it still shows the demand from the international market," he said.
The buoyant Chinese exports compare with sluggish growth in South Korea and Taiwan, two other trade bellwethers, casting doubt over the strength of any pick-up in global demand.
South Korea's exports fell sharply last month and Taiwan's shipments dropped by the most in 13 months.
Zhang Zhiwei, an economist at Nomura, said the inconsistency may be explained by capital inflows.
"Reported exports may be higher than they actually are," Zhang said.
China's exporters may be over-stating export revenues while importers under-report their trade to try to get around strict Chinese capital controls and sneak funds into the country.
China's commercial banks and the central bank bought a record 683.7 billion yuan of foreign exchange in January, data showed this week - a sign of rising capital inflows.
"The possibility of hot money inflows via trade could not be ruled out," said Li Huiyong, an economist at Shenyin & Wangui Securities in Shanghai.
Indeed, new export orders and imports in China's official manufacturing purchasing managers' index (PMI) in February suggested the trade outlook remained tepid.
China is due to release the bulk of its monthly economic data on Saturday.
Industrial output for January and February -- combined to smooth out the impact of the Lunar New Year -- may show a rise of 10.5 percent from a year earlier, a Reuters poll shows.
Up from 10.3 percent in December, the figures might disappoint those who expected more following a pick-up in economic growth in the fourth quarter of 2012.
China's economy expanded by 7.9 percent in the fourth quarter from a year earlier, bouncing from the 7.4 percent rate of the third quarter, the slowest three months of growth since the first quarter of 2009 when the global financial crisis raged.
Economists polled by Reuters expected retail sales figures to show a rise of 15 percent for January and February combined, in line with the pace at the end of 2012.
The year-on-year rise in the consumer price index may have spiked to 3.0 percent in February from 2.0 percent in January, resulting almost entirely from the Lunar New Year effect on food costs.
China's own official statisticians seek to avoid the distortions in industrial output, fixed asset investment and retail sales data by publishing combined numbers for the first two months of the year.
(Additional reporting by Lucy Hornby in BEIJING; Editing by Neil Fullick)
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