China’s December exports rose a forecast-beating 17.7% year-on-year to US$112.3 billion and marked the first move into positive growth in 14 months.
Published by the General Administration of Customs, the figures confirm China’s place as the world’s largest goods exporter; consultant Global Trade Information Services last week put China’s January-October exports at US$957 billion versus Germany’s US$917 billion
Full-year exports fell 16% to US$1.2 trillion but are likely to continue December’s uptrend through the first quarter in the coming months due to steady improvement in external demand meaning we should be looking out for some decisive policy changes from Beijing.
With the assumed return of export growth questions are likely to be asked about China’s stimulus exit plans as we start the final year of support spending; the 8.9% GDP growth recorded in the third quarter is a testimony to the success so far of the US$586 billion spending plan announced in November 2008.
Any exit plan will involve a fine mix of policy tightening including all the fun stuff like issuing sterilization bills, twisting the bolts of mortgage lending and raising the bar for developers to get their hands on cash, stabilizing banks’ books, tackling inflation, and preventing asset bubbles in other areas of the economy. Talk of rate hikes is also sure to come.
But of greater international concern, particularly the US and the EU, will be the timing of any revaluation of the renminbi. Appreciation of the domestic currency, no matter how measured, was always going to be contingent upon a real strengthening of exports.
Yet policy makers in the capital will want to wait another couple of months to ensure the figures are there to support claims that the export market is back in the swing of things before they begin to broach the subject of revaluing the renminbi.