By Dow Jones Business News,
July 10, 2014, 01:38:00 AM EDT
By Mark Magnier and Richard Silk
BEIJING--Chinese exports grew in June on the back of strengthening U.S. consumer demand, in a positive sign for
China's factory sector and for the global economic outlook.
The pace of export growth disappointed some economists, though others blamed the lingering impact of distortions in
last year's Chinese trade numbers used to make the comparison.
"The global demand recovery is still on track but the momentum is very modest," said Ma Xiaoping, an economist with
HSBC Holdings PLC.
The results came as U.S. officials raised concerns this week over China's controlled currency--the yuan, or
renminbi--at a two-day strategic and economic meeting with Chinese officials in Beijing. Washington says China's
currency policy provides an unfair advantage to Chinese exporters, a charge that Beijing denies. The meeting wraps up
Chinese exports expanded by 7.2% year-over-year in June, compared with the 7% year-over-year increase in May,
according to China'sGeneral Administration of Customs on Thursday. This was below the median forecast of 10% growth
from a Wall Street Journal poll of 21 economists.
Some economists shrugged off the shortfall. "A number over 7% is quite decent, quite real," said Lu Ting, economist
with Bank of America Merrill Lynch. "I think it's the right pace for China based on global demand. Forget about
Others cited strong import data, which suggested solid demand from Chinese consumers and a positive impact on
China's efforts to speed up infrastructure spending and loosen credit--moves economists call a ministimulus.
"We saw imports go up quite a lot," said ANZ economist Li-Gang Liu. "And the strong trade surplus will vindicate
the U.S. view that the Chinese are still accumulating a large trade surplus, suggesting that the renminbi might not have
reached its fair value."
Comparisons with last year's export data have been tricky in recent months. Some Chinese companies used a method
known as overinvoicing in the first half of 2013 as a way to circumvent strict Chinese capital controls, a phenomenon
that inflated export figures.
The rise in outbound shipments came as U.S. consumers start to pry open their wallets after bad weather in the
first quarter kept many at home. It also comes as European economies show signs of bottoming out. But China's weak
first-half trade results, which saw imports and exports grow by a combined 1.2%, will make it "tremendously hard" for
China to reach its 7.5% trade growth target for 2014, Customs Administration spokesman Zheng Yuesheng said Thursday.
That said, export momentum does appear to be returning, analysts said. U.S. imports of goods from China increased
in each of the past four months to reach $37.99 billion in May, according to Commerce Department data. Despite tepid
global economic growth in recent years, China has continued to pick up market share. Nearly 20% of goods imported
globally by the U.S. now come from China, up from 16% in 2008, although some say rapidly rising wages may blunt China's
China's trade surplus was $31.6 billion in June, well below May's $35.92 billion, but still strong. Imports grew by
6% year-over-year in June compared with a 1.6% decline in May, beating the economists' median forecast of a 5.4% rise.
In a competitive global market, China's recent yuan depreciation is welcome, exporters said. The Chinese currency
has depreciated by 2.4% against the dollar this year and is currently trading at around 6.19 yuan to the dollar, up from
a 3% depreciation earlier this year. "Three percent is three percent," said Thomas Schneider, chief executive of ISA
TanTec, which exports leather used in hiking boots and running shoes from its factory in Heshan, a city in southern
China. "It definitely helps."
Economists said they hope to see Chinese trade figures settle into a more predictable pattern. "Exports should be
around 7% to 8%, with imports around the same," said ANZ's Mr. Liu. "Recently, trade data has become quite volatile with
all the fake invoicing and arbitrage. We hope to see more normal trade data driven by external demand."
Shares on the Hong Kong and Shanghai exchanges were modestly higher at midday Thursday following the release of
trade data. The Australian dollar, which is sensitive to Chinese economic news because Australia is a major raw-material
supplier to that country, was down slightly against the U.S. dollar.
Write to Richard Silk at firstname.lastname@example.org
(END) Dow Jones Newswires
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