Booming China trade numbers raise eyebrows
CHINA appeared to defy fears of an economic slowdown yesterday with a storming update of trading activity in and out of the country, yet analysts warned over the reliability of the data.
Economic figures in recent weeks have pointed to less positive than expected growth in China for 2014.
Nonetheless, yesterday’s numbers showed imports jumping 10 per cent in January compared to a year earlier, while exports shot up by 10.6 per cent.
Despite the higher imports – driven largely by record volumes of copper, iron ore, and crude oil – China’s surplus grew to $31.9bn (£19.3bn).
“The numbers should probably be better taken with a pinch of salt,” said Anita Paluch of Varengold Bank.
“On the surface they show China is defying the slowdown, though upon scratching questions emerge over what the data means given the fact that the practice of over-invoicing and hence inflating results is common.”
Some analysts warned that the data may have been affected by so-called fake invoicing, where deals are forged in order to circumvent capital controls.
Stockpiling ahead of the Chinese Lunar New Year celebrations may also have prompted a one-off effect on the figures, economists warned, advising that several months of figures should be observed for a clearer picture.
Stocks still performed well, however, partly boosted by the trade data. The Hong Kong Hang Seng Index climbed nearly 1.5 per cent to close at 22,285.79, while the Shanghai stock exchange was up 0.3 per cent yesterday. The S&P Asia 50 index climbed around 1.6 per cent.
“China is not a country we expect to succumb to serious problems over the next few years,” commented Robert Wood of Berenberg.
“It likely to keep growing at rates around seven to 7.5 per cent. Slower growth but increased reliance on consumption should be a benefit to the world economy.”