Strong China January trade data sparks cheers, doubts

Wed Feb 12, 2014 1:24am EST
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BEIJING (Reuters) - China surprised markets with a thumping trade performance in January as import growth hit a six-month high, drawing some skepticism about the data but still allaying fears of a deepening economic malaise.

Analysts who had expected the long Lunar New Year holiday to drag on January's trade warned that the figures may be inflated by fake trade transactions, where traders forge deals to sneak cash into the country past capital controls.

The value of China's total exports climbed 10.6 percent in January from a year earlier, the Customs Administration said on Wednesday, more than five times market forecasts for a 2 percent rise.

The value of imports also jumped 10 percent from a year ago as China bought record volumes of iron ore, crude oil and copper. That lifted import growth to its highest level since July, handily beating predictions for a 3 percent gain.

The country's trade surplus rose to $31.9 billion, well above forecasts of $23.7 billion and December's $25.6 billion.

"We find this strong level of export growth puzzling," said Zhang Zhiwei, an economist at Nomura. "It is unclear to what extent the strong export data reflects the true strength in the economy."

A run of underwhelming economic data from China in recent weeks had steeled investors for another disappointment on Wednesday, as markets braced themselves for more signs that the world's second-largest economy is losing momentum.

Fears that China may be slipping into a sharper-than-expected slowdown were believed to have fed a fierce selloff in global financial markets in January, with emerging markets hit particularly hard.

As the Lunar New Year falls in January in some years and in February in others, distorting trends early in the year, it may be months before investors see data which offers more reliable clues on the economy's true direction.   Continued...

Containers are seen at a port of Shanghai Free Trade Zone, February 11, 2014. REUTERS/Aly Song