Confirmation came over the weekend that China overtook Germany to become the world’s largest exporter.
The General Administration of Customs released December trade data that showed that exports were up 17.7% year-on-year, the first time there has been growth for 14 months, and that China’s trade surplus is still a huge $18.43 billion.
The strength of the data seems to have captured the imagination of the market and there are whispers about China relaxing its iron grip on the renminbi and allowing it to revalue upwards.
However, there are a couple of things to bear in mind before we get carried away. The first is that China overtook Germany not because its export machine surged ahead, but because China weathered the economic downturn slightly better. Exports in China feel in the year as a whole by 16% but they fell faster and harder in Germany.
The second is that the 17.7% growth figure, which would seem to indicate strong growth in the export sector, has to be put into context. The figure is a comparison with last year, when the whole world was going to hell in a handcart and international trade had all but dried up. Of course this December’s figure is going to look rosy by comparison.
However, the good news is that exports to the US and Europe, which account for nearly half of China’s overall exports, picked up in December and that those markets are now looking far healthier than before.