* February exports surprisingly strong
* Imports weaker than forecast
* Data suggests modest economic recovery intact
* Lunar New Year holidays distort reading of data
* Traders may have over reported figures to boost inflows
By Koh Gui Qing and Xiaoyi Shao
BEIJING, March 8 China's exports soared past
forecasts to jump by a fifth in February from a year ago, a sign
the country's modest economic revival is intact and suggesting
global demand may also be on the mend.
But underlining expectations that China's recovery is
fragile and vulnerable to a wobbly world economy, Chinese
imports were surprisingly weak, falling 15.2 percent from a year
earlier to 13-month lows, customs data showed on Friday.
And some analysts suggested exporters may have overstated
their business to sneak funds into the country and avoid capital
restrictions, an argument backed up by figures showing rising
money inflows into China and weak trade reports elsewhere.
Still, on balance, most analysts were upbeat about the
figures, suggesting they indicated a modest pick up in economic
growth in the fourth quarter of 2012 had extended into 2013.
"We are impressed by China's ability to expand its exports
so strongly despite muted external environment," said Dariusz
Kowalczyk, a senior economist at Credit Agricole CIB in Hong
Kong. "The data is positive for sentiment."
Exports rose 21.8 percent in February from a year earlier
and were 20.6 percent higher on a calendar adjusted basis.
Exports growth to the United States was the strongest in a year
and to the euro zone it was the highest in 18 months.
Due to China's long Lunar New Year holiday, which falls
either in January or February depending on the year and during
which many factories are shut, analysts warn against reading too
much into one month's data because of seasonal distortions.
However, the strength in China's exports is apparent even
when their January and February performances are combined.
Exports for the two months combined rose 23.6 percent, while
imports increased 5 percent, the customs office said. That
compared with expectations for rises of 17.6 percent and 10.0
China's Commerce Minister Chen Deming said on Friday he was
hopeful that the country's export sales would improve this year.
"I myself am optimistic that trade growth will exceed last
year's 6.2 percent," Chen said without giving a forecast. He was
speaking at a briefing on the sidelines of China's annual
The stronger exports figures were also borne out by comments
from Ningbo Port Group, China's third-largest port operator
located in the heart of the export-orientated Yangtze River
Delta manufacturing hub.
"Our data in the first two months shows the foreign trade
situation is improving," Chairman Li Linghong told Reuters ahead
of the trade data.
Ningbo port's container volumes rose 13.6 percent in January
and February from a year earlier and cargo volumes increased
12.4 percent, Li said.
"Usually the first two months are a peak season for
companies to deliver orders, but it still shows the demand from
the international market," he said.
The buoyant Chinese exports compare with sluggish growth in
South Korea and Taiwan, two other trade bellwethers, casting
doubt over the strength of any pick-up in global demand.
South Korea's exports fell sharply last month and Taiwan's
shipments dropped by the most in 13 months.
Zhang Zhiwei, an economist at Nomura, said the inconsistency
may be explained by capital inflows.
"Reported exports may be higher than they actually are,"
China's exporters may be over-stating export revenues while
importers under-report their trade to try to get around strict
Chinese capital controls and sneak funds into the country.
China's commercial banks and the central bank bought a
record 683.7 billion yuan of foreign exchange in January, data
showed this week - a sign of rising capital inflows.
"The possibility of hot money inflows via trade could not be
ruled out," said Li Huiyong, an economist at Shenyin & Wangui
Securities in Shanghai.
Indeed, new export orders and imports in China's official
manufacturing purchasing managers' index (PMI) in February
suggested the trade outlook remained tepid.
China is due to release the bulk of its monthly economic
data on Saturday.
Industrial output for January and February -- combined to
smooth out the impact of the Lunar New Year -- may show a rise
of 10.5 percent from a year earlier, a Reuters poll shows.
Up from 10.3 percent in December, the figures might
disappoint those who expected more following a pick-up in
economic growth in the fourth quarter of 2012.
China's economy expanded by 7.9 percent in the fourth
quarter from a year earlier, bouncing from the 7.4 percent rate
of the third quarter, the slowest three months of growth since
the first quarter of 2009 when the global financial crisis
Economists polled by Reuters expected retail sales figures
to show a rise of 15 percent for January and February combined,
in line with the pace at the end of 2012.
The year-on-year rise in the consumer price index may have
spiked to 3.0 percent in February from 2.0 percent in January,
resulting almost entirely from the Lunar New Year effect on food
China's own official statisticians seek to avoid the
distortions in industrial output, fixed asset investment and
retail sales data by publishing combined numbers for the first
two months of the year.