Analysts cautious on prospects for China's exports
Total tRecovery in US and European economies expected to underpin demand for mainland goods amid downward pressures from domestic reforms
The mainland's exports prospect is likely to get a boost through a recovery in demand from developed nations this year, but analysts caution the country's expanding trade surplus which touched a four-year peak in 2013 may stoke appreciation fears on the yuan.
Export growth decelerated to 4.3 per cent year on year last month from the 12.7 per cent growth posted in November, below market expectations for a rise of about 5 per cent, data issued by the mainland customs bureau showed.
Steady domestic demand supported imports as they rose 8.3 per cent from a year earlier, compared with 5.3 per cent in the previous month.
The trade surplus expanded last year to US$260 billion, about 12.8 per cent higher than the US$230 billion registered in 2012. It was the highest growth in the surplus since the global financial crisis in 2009 hammered the global economy.
While the pace of export growth was disappointing last month, the prospect of recovery in the United States and European economies is set to underpin external demand this year, analysts say. That would offset the downside pressures on the economy expected from Beijing's rebalancing efforts and its curbs on industrial overcapacity and local government debt risks.
"We remain cautiously optimistic for China's external outlook," said HSBC economists Ma Xiaoping and Qu Hongbin in a research report.
"The deceleration in export growth is mainly due to high base effect distortions. We expect modest improvements in external demand going forward.
"A rebound in import growth indicates that domestic demand expansion is still steady."
Exports growth showed an unusual surge that began in late 2012, hitting a six-month high with 14 per cent growth in December that year due to fabricated trade deals made by exporters in a bid to channel in more overseas funds to the mainland to bet on yuan appreciation.
The over-invoicing activities lasted until April last year, before regulators cracked down on cross-border speculation. The high comparison base would drag down exports growth over the next few months.
The combined value of imports and exports reached US$4.16 trillion last year, up 7.6 per cent from 2012 and shy of the government's target for a second year.
Beijing had targeted for 8 per cent growth last year.
Customs bureau spokesman Zheng Yuesheng told reporters in Beijing that "it's almost certain" the mainland surpassed the US as the world's largest cargo trading country last year.
The US had yet to disclose its full-year data, but its trade growth had been below 1 per cent in the first 11 months of last year, Zheng said.
However, he warned that the trade situation remained challenging this year as the mainland was facing rising labour, financing and pollution reduction costs as well as yuan appreciation pressures.
The yuan gained more than 3 per cent against the US dollar last year.
ANZ Bank said the yuan might strengthen to 5.98 against the dollar by the end of this year.
Economists also fretted that the gradual withdrawal of the US Federal Reserve's quantitative easing policy this year through reduced bond buying may hurt emerging economies and their demand for Chinese products.