China exports unexpectedly rebound as yuan weakness kicks in

(THE STRAITS TIMES)China's exports unexpectedly rose in December, while a slump in imports moderated, suggesting a weakening currency may be starting to boost competitiveness in the world's biggest trading nation.

Overseas shipments increased 2.3 per cent in December in yuan terms from a year earlier, the customs administration said on Wednesday (Jan 13). That compared with a 3.7 per cent drop in November. Imports extended a stretch of declines to 14 months, falling 4 per cent in yuan terms, compared with a 5.6 percent drop a month earlier, leaving a trade surplus of 382 billion yuan (S$83.29 billion).

The Australian dollar, Chinese stocks and S&P 500 Index futures climbed after the export pick up and wider trade surplus, which may relieve pressure for further yuan weakness. China's tumbling shares and weakening currency have roiled global markets in 2016, shaking confidence in an economy that's struggling to stabilize after it likely grew last year at the slowest pace in a quarter of a century.

"Despite market turmoil, the growth recovery is on track thanks to previous easing measures taking effect, which lend support to import growth," said Daili Wang, a Singapore-based economist at Roubini Global Economics. "The recovery is still fragile."

As policy makers continue to prioritize stability, Mr Wang doesn't expect the yuan to depreciate again as much as it has in recent weeks. Stronger-than-expected export growth doesn't justify further depreciation, he said.

China imported a record amount of crude last year as oil's lowest annual average price in more than a decade spurred stockpiling and boosted demand from independent refiners. The world's largest energy consumer increased imports by 8.8 per cent to a record 334 million metric tons (about 6.7 million barrels a day) in 2015, according to preliminary data released by the Beijing-based General Administration of Customs on Wednesday.