China's imports leapt in August, boding well for a strengthening of domestic demand in an economy that has become a major driver of global growth. The unexpectedly big increase in imports also dented China's politically contentious trade surplus ahead of US Congressional hearings next week on whether to punish Beijing for what many in Washington see as an unfairly undervalued yuan.
Wang Hu, an economist with Guotai & Junan Securities in Shanghai, said the import figures along with robust car sales data suggested that China's economy had touched bottom in August. "As European and US economic growth has slowed since the second quarter, China may again lead the global recovery," Wang said.
Imports jumped 35.2 percent in August compared with a year earlier, easily beating July's 22.7 percent rise and market forecasts of a 26.1 percent increase, General Administration of Customs data showed on Friday. Annual export growth slowed to 34.4 percent in August from 38.1 percent in July but was close to expectations of a 35.0 percent rise.
That left China with a trade surplus of $20 billion, still eye-popping but down from $28.7 billion in July and well below the median forecast of $27.1 billion. Growth had slowed over the first half of the year in response to government steps to rein in bank lending, deter property speculation and close obsolete, energy-guzzling plants in sectors such as steel and cement.
Housing prices have been steady since June, the government said on Friday, a sign that its measures to cool the property market have been successful. Heavy industries have also been running down their inventories, further dampening growth, but the import figures suggest this trend was petering out somewhat, said Qian Wang, an economist with J.P. Morgan in Hong Kong.
Financial markets were moderately impressed by the resilience shown by China, which by some estimates has already overtaken Japan as the world's second-largest economy. Asian stocks outside Japan were up 0.2 percent, while the Australian dollar, which is sensitive to Chinese growth prospects, finished at a four-month closing high. Shanghai stocks ended the day up 0.26 percent.
Dong Xian'an, chief macroeconomist with Industrial Securities in Beijing, said the data implied a strong rebound in domestic demand. Analysts polled by Reuters expect the Chinese economy to grow 10 percent this year before slowing to a 9 percent pace next year. Coincidentally or not, the Chinese central bank let the yuan climb on Friday to its highest level since it was depegged from the dollar on June 19. Still, the yuan has gained less than 1 percent against the US currency since then. Moreover, China's rolling 12-month trade surplus widened in August to $177.1 billion from $172.8 billion, handing ammunition to critics who say the country is fixated on exports and is fuelling unhealthy global economic imbalances.
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