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China tops forecast with strong growth

City A.M. Reporter
Growth in China’s exports and imports last month blew past expectations, figures yesterday revealed, providing fresh evidence of the vigour of the economy and strengthening the case for Beijing to let the yuan start climbing again.

Exports leapt 17.7 per cent from a year earlier, dwarfing the 4.0 per cent rise forecast by economists and breaking a 13-month streak of year-on-year declines; imports surged 55.9 per cent, much more than the 31.0 per cent increase markets had expected.

“The strong acceleration in imports may heighten the chances of overheating and put more pressure for the government to tighten policy,” said Wang Hu, an economist at Guotai Junan Securities in Beijing. Based on the trade data, he estimated industrial output in December grew by more than 25 per cent from a year earlier and that GDP growth in the fourth quarter exceeded 11 per cent.

Despite the leap in exports, the even bigger jump in imports meant China’s trade surplus slipped to $18.4bn in December from $19.1bn in November and $39.0bn in December 2008. Economists had expected it to tick up to $19.6bn.

China was not the only Asian exporter to enjoy a dazzling December. South Korea and Taiwan reported export growth of 46.9 per cent and 33.7 per cent, respectively.

But China is far bigger, overtaking Germany as the world’s biggest exporter of goods in 2009. Its booming investment and consumption are helping to rebalance the world economy even though Beijing has refused to let the yuan rise against the dollar since the global financial crisis began in mid-2008, said Rob Subbaraman, chief Asia economist at Nomura in Hong Kong.

Its imports of crude oil also hit a monthly record, while iron ore shipments were the second highest ever and copper imports beat expectations.

Booming Chinese demand will be a boon for commodity exporters like Australia, said Liu Nenghua, an economist with Bank of Communications in Shanghai.

“It shows that China will continue to play an important role in driving world economic growth,” he said.