Robust trade growth evidence of strong economic fundamentals, risks remain

BEIJING - China's foreign trade started on a positive note in the first month of 2018, adding to evidence of steady economic fundamentals, but an increase in US protectionism may dampen future trade growth.

China's foreign trade volume rose 16.2 percent year-on-year in January to 2.5 trillion yuan ($400 billion), compared with 14.2-percent rise in 2017, the General Administration of Customs said Thursday.

Exports increased 6 percent to reach 1.3 trillion yuan while imports rose 30.2 percent to 1.2 trillion yuan.

The trade surplus shrank 59.7 percent to stand at 136 billion yuan, compared with a 14.2-percent reduction in 2017.

"Export growth remained robust in January, indicating strong economic fundamentals," said a report from China Merchants Securities (CMS).

A solid global growth also provided some support as global demand rose, said the report.

Customs data also showed that a leading indicator for China's exports rebounded from 41.1 to 41.6 month on month in January, signaling positive potential in exports.

January's import growth was driven in part by demand from factories restocking before the Spring Festival holiday in mid-February, according to the CMS.

The data also reveals a more balanced economy and upgraded economic structure.

General trade, which has a higher added-value than processing trade, has increased both in volume and proportion, expanding to 1.47 trillion yuan in January and accounting for 58.6 percent of total foreign trade.

Trade with countries along the Belt and Road rose 17.8 percent year-on-year, 1.6 percentage points higher than the general trade growth.

Chinese private enterprises played a bigger role in trade in January, edging up 0.2 percentage points in its share of total trade compared with January 2016.

Electro-mechanical products remained a pillar of exports, with some high value-added products doing well. Electronics and home appliances products continued to expand in January.

Imports and exports with major trading partners remained strong. The European Union, the United States and ASEAN are the top three trading partners of China.

China's trade volume with the United States rose 11 percent year-on-year in January to 352 billion yuan, accounting for 14 percent of the total.

Exports to the United States climbed 7.5 percent while imports from the country jumped 20.5 percent.

Trade surplus with the United States narrowed 0.2 percent year-on-year to 144.8 billion yuan, compared with 13 percent-rise in 2017.

Looking forward, analysts expect China's high-quality development and global economic recovery will continue to support China's foreign trade in 2018, but rising US-China trade friction remains a key risk.

Solid global growth may provide some support for export growth, but real effective exchange rate appreciation and an increase in US protectionism could weigh on exports, narrowing the trade surplus further, according to securities trader Nomura.

"We hope economic and trade cooperation between China and the United States not only benefits both sides, but serves as a positive force for world growth," Gao Feng, spokesman of the Ministry of Commerce,told a recent press briefing.