Robust China trade data a boon for Asia as protectionist risks loom

China January exports, imports beat forecasts
Exports rise most since February 2015, imports highest in 4 years
Construction boom fuels heavy imports
Spectre of Trump protectionism clouding trade outlook

BEIJING: China posted much stronger-than-expected trade data for January as demand picked up at home and abroad, an encouraging start to 2017 for the world’s largest trading nation even as Asia braces for a rise in US protectionism under President Donald Trump.
Trump criticised China, Japan and Germany last week, saying the three key US trading partners were engaged in devaluing their currencies to the harm of US companies and consumers.
But he has not followed through yet on threats to label China a currency manipulator and slap heavy tariffs on Chinese goods, and took a major step on Thursday to improve ties by holding a phone call with President Xi Jinping.
“China’s trade data are going to be pretty good in the first part of this year because of the very good run that we had in the last part of 2016,” said Louis Kuijs, head Of Asia economics at Oxford Economics in Hong Kong.
“The worry we have is really about US trade policy, which is undeniably turning more protectionist… It is pretty obvious to me that the climate for exports to the US is going to be much harsher in the coming years.”
China’s imports in January rose at the fastest pace in four years, fuelled by a continued construction boom which is boosting demand and global prices for resources from copper to steel, preliminary customs data showed on Friday.
The 16.7 per cent bounce easily eclipsed an expected rise of 10.0 per cent in a Reuters poll. China’s imports from the United States rose 23.4 per cent in January, the fastest pace in at least a year, while its monthly trade surplus with the US dipped to $21.37 billion.
Both Chinese and US data show China’s surplus with the US narrowed last year, but it remained well above the sustained level of more than $20 billion that is one of three criteria used by the US Treasury to designate another country as a currency manipulator.
The surplus decreased $20.1 billion to $347.0 billion in 2016, the US Commerce Department said on Tuesday, while Chinese data put it somewhat lower.
Led by electronics, China’s January exports climbed the most in almost a year, adding to evidence that Asia’s long trade recession may be bottoming out.
January shipments rose 7.9 per cent, more than twice as much as expected, after 2016 exports slumped nearly 8 per cent.
China had been lagging a recent export recovery seen in Japan, South Korea and Taiwan, dragging on the regional supply chain. Its integrated circuit shipments rose 14.5 per cent last month, while exports of mobile phones rose 7.9 per cent.
That left the country with a initial trade surplus of $51.35 billion for the month, the highest in a year. Customs is due to release updated data for trade on February 23.
“The export outlook for China is good, except for the potential risk of a Sino-US trade war. The most important risk for China is what the Trump administration will do,” Jianguang Shen, Chief Economist at Mizuho Securities in Hong Kong.
China watchers warned the long Lunar New Year holidays may have distorted the data to some degree, with companies pumping up production or rushing to build inventories before the break, which can last for weeks.
But most economists agreed the trend backed the view that manufacturing demand is improving in China and globally. — Reuters