While international trade is hit by cold winds, China surprises the market with its foreign trade figures in November.China's export and imports in US dollar terms both rebounded from slump, an indication that the EU and US markets are improving.And China's exports last month even recorded the biggest hike in two years.This suggests to a certain degree that China's domestic demand maintains a tendency of growth and continues to be the main driving force for economic development.The figures serve a signal that the Chinese economy is bottoming out, which helps stabilise yuan's exchange rate.
In view of China's latest foreign trade data, the country's economic growth in the last quarter could well keep the pace in the first three quarters or ever be a bid faster, due to slightly warming up external demand and further supported by internal demand. Hence there should be no suspense now that the 6.5 per cent to seven per cent growth goal for the whole of this year can be achieved.This means China continues to keep middle- and high-speed growth, not only holding the lead in the world but also contributing at least a quarter to global economic growth. Therefore, it provides a good bargain-hunting opportunity for central banks of foreign countries and overseas institutional investors to buy in yuan assets, as yuan has dropped to an eight-year low against the greenback.
As a matter of fact, over the past half of a year, amid the Brexit referendum in UK, Donald Trump winning out in the US presidential election and the constitution-revision referendum in Italy, global economy and financial market are constantly on tenterhooks.In addition to this, trade protectionism is on the rise. As a result, growth of global trade this year will underperform economic growth, and China's foreign trade can hardly be spared.
In fact, hitherto there is no sign showing improvement of the global economy.Instead, bearish news keeps coming out.At first Australia reported negative growth in the third quarter, then Japan lowered its economic growth.The surprise of China's better-than-expected exports last month could be said to have brought some warmth and give a boost to the global economy.
Either in terms of the US dollar or yuan, China's exports in November rebounded from slump, increasing by 0.5 per cent and 5.9 per cent respectively. This has something to do with the seasonal factor of growing demand during Christmas and New Year in EU and US markets. China's exports to US and EU grew 6.9 per cent and 5.1 per cent respectively last month.
What is worthy of attention is that China's export of high value-added products gradually increases in recent years, which is also an important factor for exports to rebound from slump.This is a result of industrial restructuring and upgrading, which helps to grab a bigger market share. Devaluation of yuan against the US dollar no doubt could help improve competiveness in China's exports, but currencies of emerging economies also devalue a great deal. Hence the factor of boosting exports by currency devaluation should not be exaggerated.
Compared to exports, China's imports last month are more worthy of attention, which increased by 6.7 per cent and 13 per cent in US dollar and yuan terms respectively. The strong growth is closely related to the price bounce of commodities and the Producer Price Index (PPI) turning positive from negative, in addition to this, another key factor is the restart of inventory replenishment by industrial enterprises after an interim inventory reduction, evident that internal demand remains strong.As consumption's contribution to economic growth has reached 70 per cent, as long as domestic demand remains a driving force for growth, China's economy could sustain its good tendency of improving while maintaining stable.
Given the dark clouds hanging over the global economy and the uncertainty in the US policy toward China trade under a Trump administration, China's exports can hardly be said to make a recovery, particularly amid an upsurge of anti-globalisation waves.China must persist in economic restructuring and industrial upgrading to proactively pursue a shift in economic dynamics, enabling consumption and services to gradually replace exports and investment as main stimulants to economic growth.This is the way to promote long-term and sustainable economic development.
09 December 2016
