China's Import Machine Roars Back to Life in January; Exports Also Beat Forecast

China’s trade machine kicked up a gear in January after stumbling the previous month, with exports and imports both growing much more than expected, pointing to a strong start to the year for global demand.

Thursday’s robust data, along with last week’s strong manufacturing and service surveys, suggest China’s economy remained resilient at the start of 2018 and may even have picked up some momentum, despite crackdowns on factory pollution and riskier financing that are driving up borrowing costs.

Exports in January rose 11.1 percent from a year earlier, picking up from a 10.9 percent gain in December, official data showed. Analysts had expected growth to cool for a second straight month to 9.6 percent.

Imports surged 36.9 percent, the General Administration of Customs said, the fastest pace since last February and smashing analysts’ forecast of 9.8 percent growth.

China’s import growth had sharply decelerated to 4.5 percent in December, raising fears that its domestic demand was slumping as Beijing forced northern smelters and mills to curtail production to reduce thick winter smog.

Commodities again led the way in January, with China’s crude oil imports hitting a record and iron ore imports at the second highest on record.

The figures left the country with its smallest trade surplus in 11 months at $20.34 billion, compared with December’s $54.69 billion and forecasts for a $54.1 billion surplus in January.

However, data from China in the first two months of the year must always be treated with caution due to business distortions caused by the timing of the long Lunar New Year holidays, which fell in late January 2017 but start in mid-February this year.

Some of the jump in imports may have been due to inventory building ahead of the holidays rather than a pick-up in consumption, though economists said the data was still positive.

“January trade data may be affected by the always changing timing of the Chinese New Year holiday...(but) such strong import data indicates that domestic demand momentum remains healthy going into 2018,” Louis Kuijs, head of Asia economics at Oxford Economics, wrote in a note.

Kuijs expects China’s import growth to slow in coming months due to unfavorable comparisons with high levels last year and an expected slowdown in overall economic activity.

China’s imports surged nearly 16 percent last year, the best since 2011, as a construction boom added to its insatiable demand for raw materials.