China July trade data eases pessimism as exports jump an unexpected 5.1pc

Exports rise a higher-than-expected 5.1 per centin July as imports increase 10.9 per cent

PUBLISHED : Friday, 09 August, 2013, 12:00am
UPDATED : Friday, 09 August, 2013, 2:47am

The mainland's economy is showing signs of stabilising after last month's trade figures showed stronger-than-expected growth in exports and imports on the back of a global recovery.

Exports rose 5.1 per cent from July last year to 1.15 trillion yuan (HK$1.5 trillion), while imports grew 10.9 per cent to 1.04 trillion yuan, the General Administration of Customs said yesterday.

Recovering from a 3.1 per cent year-on-year decline in June, the growth in exports beat market expectations for a 2 per cent rise.

The trade surplus dropped 29.6 per cent month on month to 109.8 billion yuan.

"Although we still can't confirm a turnaround in trade, confidence in the mainland's economy has stabilised," said Zhao Xijun, a finance professor at Renmin University.

A recovery in global markets and the government's measures to support export-oriented factories would foster trade growth, Zhao added, predicting that the momentum would be sustained over the next two months.

An improved economic outlook boosted trade last month, Bank of America Merrill Lynch economist Lu Ting said in a research note.

The official purchasing managers' index rose to 50.3 last month from 50.1 in June. A reading of above 50 indicates expansion.

Li Huiyong, the chief economist at Shenyin Wanguo Securities, said the rebound in imports from a 0.7 per cent drop in June showed a recovery in confidence in the economy.

Li said the growth in trade should reach 8 per cent this year and that the government's economic growth target of 7.5 per cent could be met.

Marco Chan, a manager at lingerie maker Xirong Underwear Industry, said the company expected sales to grow 10 per cent this year if the economic recovery in the United States continued.

The firm's business had been hit hard by the downturn in US economy since 2011, Chan said, adding that the firm exported 40 per cent of its products to the US.

"We have also pinned hopes on new markets," he said. "We are now expanding into the Russian market, where the style is similar to China's."

The company runs two plants factories in Shantou, employing 180 staff.

Chan said the operating environment remained tough because foreign buyers were placing fewer orders due to economic weakness in their own countries and the appreciation of the yuan.

"The rise in the yuan could squeeze profits, posing a challenge for exporters," Zhao said.

The mainland, the world's largest exporter, suffered its first fall in exports in 17 months in June. That prompted analysts to then say that weakness was testing Beijing's appetite for slower but better-quality growth.