China Exports Exceed Estimates in Sign of Global PickupChina’s...

China Exports Exceed Estimates in Sign of Global Pickup

China’s exports rose more than estimated in October, adding to signs the world’s second-biggest economy will rebound this quarter after industrial output climbed at the fastest pace in five months.

Overseas shipments increased 11.6 percent from a year earlier, the Beijing-based customs administration said in a statement today. That compared with the 10 percent estimate in a Bloomberg News survey of economists and a 9.9 percent gain in September. Imports increased 2.4 percent, the same pace as the previous month. The trade surplus was $32 billion.

China’s transition to a new generation of Communist Party leaders, which began in Beijing this week, may be smoothed by the reversal of a slowdown that started in last year’s first quarter. Industrial production, fixed-asset investment and retail sales accelerated in October, signaling that economic growth will exceed Premier Wen Jiabao’s 7.5 percent target for his last year in office.
“With the political dust almost settled, policy makers are shifting their focus to stabilizing economic growth and financial markets,” Lu Ting, chief Greater China economist at Bank of America Corp. in Hong Kong, said before the data release. “Global growth will remain sluggish in 2013, but tail risks, especially in the euro zone, have been reduced to a large extent so the reduction of uncertainty could boost confidence and support export growth.”

Global Demand

Today’s trade data add to signs global demand is recovering after overseas shipments from South Korea and Malaysia unexpectedly rose and Indonesia’s dropped less than estimated.
The yuan’s gains against the dollar over the past three months may damp export growth. The currency has strengthened about 2.4 percent since July 25 after a 1.6 percent decline since the start of the year. The government has restrained increases for two weeks.
The MSCI Asia Pacific Index of stocks fell 0.4 percent yesterday, taking the week’s loss to about 1 percent, as investors turned their attention to the U.S. budget debate and the European Commission cut its growth forecast for the region. In China, the benchmark Shanghai Composite Index fell for the fifth straight day, taking its loss for the week to 2.3 percent.

China’s October import growth compared with the median estimate in a Bloomberg survey for a 3.4 percent gain. Inbound shipments in August recorded the first non-holiday drop since 2009. October’s trade surplus compared with the $27.3 billion median forecast in the survey and a $27.7 billion excess in September.

Slower Pace

Foreign trade expanded at a slower pace than last year in the first 10 months of the year, according to today’s report, putting at risk the government’s 2012 target of 10 percent growth. Exports through October rose 7.8 percent while imports gained 4.6 percent, leaving a trade surplus of $180.2 billion.

China’s position as the world’s biggest exporter is encouraging investment from logistics companies. FedEx Corp., the world’s largest air-freight carrier, said last month it plans to build a $100 million-plus express-shipment facility in Shanghai to cope with rising exports from the nation. The company said the city’s Pudong airport will probably become the world’s busiest for cargo by 2015.

Europe’s protracted sovereign-debt crisis is crimping exports to the bloc, China’s biggest market last year. Sales to the 27-nation European Union fell 5.6 percent in the first nine months of the year and have dropped by more than 10 percent in September, August and July from the same period last year.

U.S. Exports

Exports to the U.S., the biggest buyer of Chinese goods this year, rose 9.6 percent in the first nine months, down from 14.7 percent in the same period last year, customs bureau data show.
Sales to other markets have countered the drop, with exports to the 10-member Association of Southeast Asian Nations rising 16.6 percent in the first nine months and those to Russia climbing 14.5 percent.
“This year, exports are weak but they haven’t collapsed like before,” Andy Rothman, China macro strategist for CLSA Asia-Pacific Markets in Shanghai, said in a Bloomberg Television interview on Nov. 8. “Right now it’s a very small negative drag” on the economy.
The lack of “mass layoffs” similar to those during the 2008 global financial crisis explains “why we haven’t seen a big stimulus,” Rothman said. “And as long as that holds up, we won’t see a stimulus.”
The central bank, in its quarterly monetary policy report released last week, warned that external demand remains weak due to the impact of the financial crisis and Europe’s debt woes, which may hurt the global economic recovery.

The European Commission this week cut its 2013 growth estimate for the 17 nations that share the euro currency to 0.1 percent from a May forecast of 1 percent and lowered its projection for Germany to 0.8 percent from 1.7 percent.