Chinese export growth accelerates in November

Worker in a Chinese factory
Image caption A recovery in its manufacturing and exports sectors is seen as key to China growth

China's exports rose more than expected in November adding to signs of a rebound in the world's second-largest economy.

Shipments rose 12.7% from a year ago, up from a 5.6% rise in October. Most analysts had forecast a growth of 7%.

Last week, data showed manufacturing activity in China grew at its fastest pace in 18 months in November.

The jump in exports was triggered by strong demand from important markets such as the US and European Union.

"There are signs that the global activity and trade cycle is gaining momentum, driven by the recovery in high income countries," said Louis Kuijs, an economist at Royal Bank of Scotland.

"China's exporters are benefiting from that."

Mr Kuijs added that China's export growth was likely to get a further boost in coming months from improving global demand.

Over the past few months Beijing has also announced stimulus measures aimed at helping exporters and boosting domestic demand.

These include tax breaks for small businesses and reduced fees for exporters, which some analysts said had also started to have an impact on the trade numbers.

Meanwhile, data released on Sunday showed that imports rose 5.3% during the month, from a year earlier.

While that was weaker than forecasts, analysts said it was not a cause for concern.

Capital inflow concerns

However, the robust exports numbers have triggered concerns that the data may not be a true indicator of the sector's health.

There were similar worries earlier this year amid speculation that some Chinese exporters may be overstating their shipments in an attempt to bypass restrictions on bringing funds into the country.

That had prompted authorities, who keep a tight grip on capital flows in and out of country, to introduce fresh steps to control any illegal flows.

Image caption There have been worries over using trade deals to bring in cash into China

In May, China's foreign exchange regulator, the State Administration of Foreign Exchange (SAFE), said it would increase its scrutiny of export invoices and impose tougher penalties on firms providing false data.

Some analysts said the latest figures may have been distorted by capital inflows disguised as trade deals.

"As China's economic fundamentals stabilise and reform pushes on, the better prospects are attracting massive hot money back," said Li Huiyong, analyst at Shenyin Wanguo Securities.

"Generally, hot money flows are seen through lower imports and higher exports, and the less than expected imports in November and higher than expected exports precisely illustrate this point."

However, some others were of the view the latest data was unlikely to have been inflated, not least because of the stricter rules unveiled earlier this year.

"While there may be issues with trade credit, it is nowadays less easy for companies to "make up" exports, given the tighter monitoring since May," said Mr Kuijs of RBS.

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