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China exports top estimates with surplus at four-year high.

Shipments to US, Europe and South Korea rise in November

China's exports rose more than estimated in November, pushing the trade surplus to the highest in more than four years in a sign global demand is helping sustain a recovery in the world's second-biggest economy.

Outbound shipments rose 12.7 per cent from a year earlier, the General Administration of Customs said on Sunday in Beijing. That exceeded estimates from 41 of 42 analysts surveyed by Bloomberg News. The trade surplus of $33.8 billion was the biggest since January 2009, while imports gained 5.3 per cent, compared with a median projection of seven per cent.

The export figures reflect pickups in shipments to the US, Europe and South Korea, according to customs data. Stronger demand from abroad may give Premier Li Keqiang more room to implement reforms to increase the role of markets in the economy while helping meet the 7.2 per cent annual growth pace he says is needed to ensure stable employment.

"There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high-income countries," Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong, who previously worked at the World Bank, said in a note. "China's exporters are benefiting from that."

Imports show "solid expansion of China's domestic demand," with prices declining from a year earlier, Kuijs said. Analysts' estimates for export gains ranged from 2.1 per cent to 13.2 per cent, with a median projection of seven per cent. The median estimate for the trade surplus was $21.2 billion. The Shanghai Composite Index rose 0.7 per cent last week for a fourth straight gain after the Communist Party's Nov. 9-12 summit in Beijing, where leaders agreed on the broadest policy shifts since the 1990s. The yuan strengthened to 6.0817 per dollar. Overseas shipments rose 5.8 per cent from October on a seasonally adjusted basis, compared with a 3.8 per cent decline in the previous month, customs data showed on Sunday.

Exports to the US advanced 17.7 per cent in November from a year earlier, the fastest pace since May 2012, while shipments to the European Union were up 18.4 per cent, the most in more than two years, based on data compiled by Bloomberg.

China's foreign-exchange regulator said that it will increase scrutiny of trade financing and that banks should prevent companies from getting financing based on fabricated trade. The measures are aimed at preventing abnormal foreign- exchange flows, the State Administration of Foreign Exchange said in a statement posted on its website and dated December 6.

The latest statement follows a crackdown that began in May after trade data were inflated for several months on fake invoicing used to disguise capital inflows.

Similar practices may be happening again, adding upward pressure on the yuan and complicating the central bank's liquidity-management efforts, said Chang Jian, China economist at Barclays Plc in Hong Kong. Year-over-year growth figures in exports overstate gains by about 1 to 2 percentage points because of last year's over- invoicing, RBS's Kuijs said.

Steve Wang, chief China economist in Hong Kong at Reorient Financial Markets Ltd., said today's data don't suggest the figures are inflated because the gains didn't come in categories that previously correlated with suspicious practices. It remains to be seen if the overseas momentum will continue, with a previous purchasing managers' survey showing new export orders are "not as strong as what people had hoped," Wang said. 

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Publication:Khaleej Times (Dubai, United Arab Emirates)
Geographic Code:9CHIN
Date:Dec 9, 2013
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