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China exports surge in September but analysts unmoved
CHINA'S exports jumped by double digits in September, but there was no burst of enthusiasm from analysts still concerned about the country's anaemic domestic demand.
While exports surged an impressive 15.3 per cent - up from August's 9.4 per cent - imports too rose an encouraging 7 per cent, reversing two months of consecutive contraction, according to figures from the General Administration of Customs.
As a result, the country's trade surplus more than doubled year-on-year to US$31 billion. Analysts had anticipated a rise of 12.5 per cent in exports and a fall of 2.4 per cent in imports, according to a Reuters poll.
Customs spokesman Zheng Yuesheng attributed the improvement to the recovery of major economies and strong external demand.
"The good momentum is expected to continue in the fourth quarter," he said.
Nonetheless, analysts cautioned against interpreting the data as a signal that China has turned the corner.
China's trade data is known to be particularly volatile and irregular and August's figures for output, retail sales and fixed asset investment pointed to slower-than-anticipated growth, raising questions about whether China would miss its gross domestic product (GDP) target for this year.
Third-quarter GDP data is due next week and is expected to hit its slowest pace in over five years.
Though Chinese officials including Premier Li Keqiang have reiterated that growth is on track to reach China's target of "about" 7.5 per cent this year, both the World Bank and the International Monetary Fund have recently cut their growth forecasts for both 2014 and next year, arguing that the real estate sector posed the biggest risk to Beijing at the moment.
House prices have fallen for five consecutive months, spurring support measures from Beijing, including the easing of lending rules for home buyers in September.
Though yesterday's data is a sign China is benefiting from global growth, analysts say domestic demand is still weak.
"The base effect for September is quite favourable, and that is one key reason behind the strong reading seen today," HSBC China economist Qu Hongbin said.
Analysts cite other factors such as possible over-invoicing that could also have lifted the numbers, as was the case last year, though at the moment there is no evidence of this.
They added that processing of imported materials was the main driver of imports last month which coincided with the launch of several electronic products made in China, including the iPhone 6.
"The strength seems to have been driven by a surge in imports for processing and re-export," said Julian Evans-Pritchard, China economist with Capital Economics.
"As such, it mostly reflects a brighter export outlook rather than a pick-up in domestic demand."
Beijing has vowed to reduce reliance on exports and investment to support growth and has embarked on a vast reform programme to boost domestic consumption. It has so far resisted implementing any major stimulus measure, saying slower growth is necessary to rebalance the economy.
The question remains just how much growth Beijing is willing to sacrifice and many analysts say more stimulus measures are to be expected.
Looking forward, the export picture remains bright, with global demand continuing to fuel demand for made-in-China goods.
"Going into next year, as overseas demand gradually recovers, we expect export growth to be stronger in 2015," HSBC's Mr Qu said.