A diverse set of responses …

From Fast FT:

  • China’s imports rose beyond expectations in January
  • Heavy commodities buying at odds with recent data showing the nation’s manufacturers are experiencing slow trading
  • January oil imports up 12%
  • Iron ore imports up33%

Chinese trade data is often complicated by factors such as people falsifying exports to sneak foreign currency into the country, and companies importing commodities when they are cheap to build stockpiles.

Chief economist of East Asia and Pacific at World Bank:

  • As there is the New Year distortion, it’s always very hard to read the first three months of China’s trade

Andrew Sullivan, director of Asian sales trading at Kim Eng Securities:

  • said the figures, if a bit skewed, show that China is able to maintain its growth momentum despite policymakers’ push to rebalance the economy

Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB:

  • The data suggests that growth slowdown was not as bad as feared. The numbers are positive for risk globally

Zeng Xianzhao, an analyst at Everbright Securities Co.:

  • Local investors are not as convinced about the export data because you have to take into account the Chinese New Year effect — the new year was is in January this year and February last year. Don’t overanalyze the January export data.


  • January’s is the fourth big monthly trade surplus in a row (they’ve averaged $30.6 billion over the past four months), suggesting that the current account is again being used to bring speculative funds onshore to benefit from China’s relatively higher interest rates and rising asset prices
  • Signs of overinvoicing at the start of last year and this year, plus new year distortions, mean that first quarter trade data will be a troublesome guide to the health of China’s export-import economy in 2014.

Guosen Securities analyst Dong Dezhi:

  • January trade was unbelievably strong. I had expected very modest or even negative growth. The Baltic Dry Index has dropped quite a lot recently. This must be hot money hiding among trade

Jackson Wong, Tanrich Securities:

  • Since last year, everyone knows we can’t take these export/import numbers seriously

Zhou Hao, an economist at ANZ in Shanghai:

  • The trade figures were a bit of a surprise to the market
  • The stronger-than-expected exports data also showed improvement in the global demand momentum

Louis Kuijs, chief China economist at Royal Bank of Scotland Group:

  • On the one hand, this should make markets more relaxed about both global demand and demand in China’s own economy
  • However, we are also left with a nagging feeling that perhaps issues such as over-invoicing have risen sharply in intensity early this year

Zhiwei Zhang, Economist at Nomura.

  • We find this strong level of export growth puzzling
  1. It is inconsistent with the new export order indexes from both HSBC and official PMIs
  2. Second, there is a strong base effect from the lunar new year holiday, which fell on 31 January this year and likely negatively affected production during the last week of January
  3. Third, although official data showed that exports were very strong in early 2013, these were driven to some extent by capital inflows that were disguised as trade flows through mis-invoicing. This also led to a very high base effect in January 2013
  • It is unclear to what extent the strong export data reflect true strength in the economy
  • At this stage, we believe capital inflows may have contributed at least partly to January’s strong export growth numbers
  • The lunar new year led to strong liquidity demand, yet domestic liquidity conditions have been tight, so there may have been strong demand for capital inflows
  • The data on industrial production for January and February will be released on 13 March and should help to confirm the actual strength of export growth
  • “We maintain our view that GDP growth will slow to 7.5% y-o-y in Q1 and 7.1% in Q2, despite favourable base effects. China’s economy is driven more by investment than exports, and therefore a moderate pickup in trade cannot offset the slowdown in investment. The strong trade data reduce the probability of policy easing in Q1. We continue to expect the tightening bias of monetary policy to sustain through Q1 and loosen in Q2, after the official PMI drops below 50 and GDP growth slows further.”

Financial Times: (gated)

  • Analysts with ANZ said that they had detected an increase in “the round-tripping trade” between Hong Kong and China. A simple way to breach China’s capital controls, round-tripping occurs when made-in-China goods are exported to Chinese companies’ subsidiaries in Hong Kong and then imported again by the original companies at marked-up prices.
  • It reflects “the incentives to take advantage of the onshore high interest rates and renminbi appreciation opportunities,” the ANZ analysts wrote in a note.