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China exports show trade recovery on track

Updated: 2010-02-10 16:30
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China's export growth accelerated in January and imports rose, adding to signs a recovery in global and Chinese demand is on track.

January exports rose 21 percent from a year earlier, up from 17.7 percent growth in December, customs data showed Thursday.

Imports skyrocketed by 85.5 percent due to being compared with a period last year when companies were idled for the weeklong Lunar New Year holiday. The holiday this year falls in February.

Still, growth exceeded forecasts by many private sector economists, suggesting trade was recovering from the global crisis that battered Chinese exporters of shoes, toys and other low-cost goods and wiped out millions of factory jobs.

"We see China's trade has entered a stable stage," said Shanghai Securities economist Hu Xiaoyue." Unless there's another around of the financial crisis, China's export recovery is well on track and won't see a double dip."

The improvement could add to pressure from Washington and other trading partners for Beijing to ease currency controls and let its yuan rise in value.

January's trade figures also were boosted by the comparison with unusually weak global demand a year earlier and low oil and commodities prices. The cost of foreign raw materials needed by Chinese industry have risen since then, inflating the import bill.

December marked the first export growth following 13 months of declines.

China overtook Germany last year to become the world's biggest exporter due partly to the ability of its adaptable exporters to keep selling abroad amid weak demand.

China's global trade surplus in January narrowed sharply to $14.2 billion, down from $39.1 billion a year earlier. The trade surplus with the United States was $10.9 billion and that with the 27-nation European Union, China's biggest trading partner, was $11.5 billion.

China's domestic consumption has rebounded on the strength of a 4 trillion yuan ($586 billion) stimulus, helping to drive demand for foreign raw materials and consumer goods. That helped to boost economic growth to 10.9 percent in the final quarter of 2009.

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Chinese exporters are hiring new workers but analysts say those industries cannot recover fully until major foreign markets rebound.

"The brutal truth is that China's exports will not be able to recover independent of a recovery in consumption in major trade partners," Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates, said in a report.

"With high unemployment, high household debt and the end of government subsidies holding back a recovery in consumption in the US, EU, and Japan, that recovery will be a gradual one."