China Trade to Pick Up in December, But Outlook Cloudy

Laborers at work at Ningbo Port
Photo: Guang Niu | Getty Images News | Getty Images
Laborers at work at Ningbo Port

China's export growth is set to rebound from a three-month low in December, although the recovery is likely to be feeble as U.S. and European demand for Chinese goods is still far below levels that would herald a convincing revival.

In a sign that exports have been the biggest drag on China's economy in the past two years, Thursday's economic data should also show the world's fastest-growing major economy missing its 10 percent growth target for trade for 2012.

Analysts polled by Reuters expect the value of Chinese exports to grow 4 percent in December from a year ago, up from November's surprisingly weak annual 2.9 percent rise, when data showed China exported fewer TVs, watches, plastics and shoes.

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The value of imports is forecast to rise 3 percent in December from a year earlier, also improving from November when there was no growth. Economists warned any bounce in trade may be brief as foreign demand for Chinese exports would stay listless.

"Given that the global economy is likely to have a weak start to 2013, the challenge on the external sector will remain in the next one to two quarters," JPMorgan said, adding that China's trade probably grew 5.6 percent last year.

China's Commerce Ministry last month also cautioned against hoping for an imminent recovery in trade, saying that world economic growth remained languid and that the country's trade likely grew 6 percent in 2012.

Figures from other Asian export heavyweights suggest that the trade outlook is mixed at best. Exports from South Korea unexpectedly fell last month, though the government blamed the poor performance on fewer working days.

Exports from Taiwan, on the other hand, surpassed expectations to rise to three-month highs, although analysts warned that shipments may have been lifted by the year-end shopping season.

China's trade sector, a key part of the country's growth engine that supports an estimated 200 million jobs, has been a drag on the world's second-largest economy for seven straight quarters.

Net exports from China have subtracted from growth in its gross domestic product (GDP) since March 2011, and had shaved 0.4 percentage points off GDP expansion in the third quarter.

With Europe, the biggest buyer of China's exports, expected to sink deeper into recession this year, analysts say it is another difficult year for Chinese trading firms.

Chinese exports to Europe slumped 18 percent from a year ago in November, their sharpest drop since August 2009. Shipments to the United States also struggled, slipping nearly 3 percent in their first fall since February 2011.

Southeast Asia, the third-biggest buyer of Chinese goods, was a rare bright spot. Exports to the region were up over 19 percent in November on an annual basis, though the performance was dismal compared with October, when shipments leapt 45 percent.