* Jan exports +25.0 pct y/y vs +17.0 pct forecast
* Jan imports +28.8 pct y/y vs +23.3 pct forecast
* Jan trade surplus $29.2 bln vs $22 bln forecast
* Prompts rise in stocks on economic recovery hopes
By Nick Edwards
BEIJING, Feb 8 China's exports and imports
surged in January as the first hard data of the year pointed to
robust domestic demand and a pick up in the economy not solely
explained by the timing of the Lunar New Year holiday.
Exports grew 25 percent from a year earlier versus a
forecast of 17 percent in a Reuters poll. Imports surged 28.8
percent to comfortably beat a consensus call of 23.3 percent and
the resulting $29.2 billion trade surplus topped a market
expectation of $22 billion.
"I think the Chinese New Year effect only explains part of
the story," Zhang Zhiwei, chief China economist at Nomura in
Hong Kong, told Reuters. "After controlling for the Chinese New
Year, the numbers are still very strong and show the economic
recovery is on track."
Investors bought that argument, lifting stock prices in
Australia and South Korea despite pressure to take profits
around the region ahead of next week's Lunar New Year lull,
while oil and copper futures also gained ground.
Global markets have risen in anticipation of a surge in
China's export growth as a signal of recovering demand in the
giant economies of the United States and the European Union.
Markets had also moved to factor in an easing of China's
inflation, forecast at 2.0 percent in a Reuters poll from
December's seven-month high of 2.5 percent.
China's year-on-year exports growth to the United States of
14.5 percent was the strongest in 10 months, while the rise in
exports to the European Union were the highest in 13 months at
Exports to China's neighbouring economies in the Association
of South East Asian Nations (ASEAN) leapt 48.6 percent versus
January 2012, worth $20.1 billion.
External demand appeared strong, even adjusting for the five
additional working days the Customs Administration said were
included in its January 2013 data versus January 2012. Exports
rose 12.4 percent after adjusting for the holiday factor while
imports rose 3.4 percent.
China publishes the bulk of its economic data for January
and February combined in March to smooth the effects of the
annual shift in the Lunar New Year holidays when many factories
shut for at least a week and often longer. The holiday fell in
January in 2012 and will be in February this year.
DOMESTIC DEMAND STRONG
The strength of imports and what that implied for the health
of the domestic economy that was most telling to Tao Wang, China
economist at UBS in Hong Kong.
"It seems to me that imports were particularly strong and
that reflects two things: one is that the domestic demand, in
particular investment demand, is very strong. The second thing
is that it seems that companies are restocking ahead of the
Chinese New Year and ahead of the peak season in March and
April," she said.
Imports from the United States soared 49.7 percent, those
from ASEAN jumped 36.5 percent and imports from the European
Union rose 20.7 percent. Imports from Taiwan rocketed 74.8
percent, making the 12.9 percent rise in imports from Australia
Analysts in general, however, are wary of reading too much
into data coming just one month after the world's second-biggest
economy posted its slowest full-year expansion since 1999 at 7.8
Ting Lu, head of Greater China economics at Bank of
America/Merrill Lynch, was particularly cautious in his reading
of the trade data, noting that import prices were rising in
tandem with China's recovery. Iron ore, for example, has surged
79 percent from September 2012 - the bottom of China's 2012
Lu forecasts 2013 export growth unchanged from the 7.9
percent pace in 2012, but thinks import growth could rise to
11.5 percent from 4.3 percent in 2012 as prices rebound.
An uptick in imported inflation already appears to be on the
mind of the central bank, even though economists expect it to
remain subdued through the first quarter of the year and
unlikely to breach 3.5 percent in 2013, a level they think the
government will soon announce as its target.
"As the economy transits into another stage of growth,
economic controls need to always emphasise containing inflation
risks," the People's Bank of China said in a fourth-quarter
monetary policy report published on Wednesday, shifting the bias
of policy back to inflation from growth risks.
The trajectory of money supply is also important against
that backdrop, with bank lending a focal point for investors
trying to assess the bias of monetary policy as loans are made
at Beijing's behest in the state-directed financial system.
China's new yuan loans may have totalled 1 trillion yuan in
January, according to a Reuters poll - up sharply on December's
454.3 billion yuan and November's 522.9 billion yuan.
A surge could indicate a supportive policy stance - despite
the PBOC's inflation alert - as well as strong credit demand in
the real economy, but it could just as easily show banks flush
with fresh state-directed lending quotas and anxious to put them
to work early.