Trade figures released today showed that China’s exports rose 21% year-on-year in January, while imports jumped 85.5%, compared with export growth of 17.7% and import growth of 55.9% in December. January’s trade surplus came in at US$14.2 billion, down 64% year-on-year. The figures are high due in large part to low base effects, especially given that last year’s Lunar New Year holiday was in January. The week-long Lunar New Year holiday, which will take place this year from February 13-19, will similarly distort year-on-year figures for February.
However, the trade figures do reflect the broader trends of gradually recovering exports and strengthening domestic demand. Although it offers Beijing a useful headline to help justify an exit from heavy stimulus spending and a loose monetary environment, officials are unlikely to accelerate any changes. More plausible developments include signs of change in the quiet renewal of government efforts to re-jig the economy toward one based increasingly on domestic consumption, as well as the resumption of gradual renminbi appreciation later in the year.
Stronger trade figures are good news for exporters, but do not change the fact that global demand is unlikely to recover to pre-crisis levels in the near future. Manufacturers will find that both demand and government policy favor strategies focused on developing domestic markets.