China trade surplus surges 48% to $231bn

Updated 11 January 2013
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China trade surplus surges 48% to $231bn

BEIJING: China's trade surplus surged in 2012, but total imports and exports grew slowly owing to weakness at home and abroad, official data showed yesterday, while analysts warned of another tough year ahead.
The trade surplus in the world's second-largest economy jumped 48.1 percent from the year before to a four-year high of $231.1 billion, the national customs bureau announced.
The increase was largely due to low growth in imports as a result of commodity prices declining last year. Total imports increased just 4.3 percent to $1.82 trillion, while exports rose 7.9 percent to $2.05 trillion.
And China's total trade grew just 6.2 percent last year, well below the government target of about 10 percent.
Customs spokesman Zheng Yuesheng told reporters that "a sharply slowing world economic recovery, weak international market demand and rather big downside pressure on the domestic economy" weighed on the results.
China's economic growth slowed for seven straight quarters to the end of September, while the broader global economy also faced weakness in 2012.
Data for the three months to the end of December are due at the weekend, while inflation figures will be released today.
The European Union — China's biggest trade partner — continued to suffer a prolonged debt crisis, and economic recovery in the United States, Beijing's number two commercial counterpart, remained subdued.
Zheng added the negative factors hurting trade last year remain in place in 2013, though he still saw some reason for optimism, citing efforts to boost growth by China and other major economies.
"We expect trade growth in 2013 to be slightly better than 2012."
The jump in the trade surplus — which in the past has been a source of friction with China's commerce partners — was mostly a result of better terms of trade "due to lower commodity prices", RBS economist Louis Kuijs said in a research note.
One bright spot was that exports and imports hit new single-month highs in December, rising 14.1 percent to $199.2 billion and six percent to $167.6 billion respectively, the figures showed.
Analysts, however, attributed the strong performance largely to one-off factors including better US data in the fourth quarter and rushed shipments by Chinese exporters at the year-end.
"Economic growth in developed economies may remain slow, so we think the challenges to China's exports remain," Sun Junwei, a Beijing-based economist with HSBC, told AFP.
"China's economic recovery will depend on whether domestic demand will turn for the better."
Analysts have expressed growing optimism that China's economic growth accelerated in the final three months of last year, citing stronger recent data including retail sales, while manufacturing activity has also picked up.
Chinese authorities have said they are committed to rebalancing their economy more toward domestic demand factors such as consumer spending and away from exports.
Ren Xianfang and Alistair Thornton, economists with IHS Global Insight, said Chinese exporters could have another difficult year due to extended weakness abroad.
"With our projection for continued contraction in the euro zone and continued slowdown in the US economy, we believe China's export sector will face another uphill battle this year — an even tougher one than 2012," they said in a research note.
Total trade with Japan, the world's third-largest economy, fell 3.9 percent to $329.45 billion in 2012, Zheng said, blaming most of the decrease on a weak Japanese economy.
But he added that a dispute between Beijing and Tokyo over small islands in the East China Sea that both claim but Japan controls "to some extent also had negative impact on the healthy development of China-Japan bilateral trade".


Chinese smartphone maker Xiaomi lowers target as it kicks off IPO

Updated 25 min 34 sec ago
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Chinese smartphone maker Xiaomi lowers target as it kicks off IPO

HONG KONG: Chinese smartphone maker Xiaomi kicked off its initial public offering Thursday but the firm is likely to pull in about $6.1 billion, far less than originally expected, with investors having mixed views about its main business.
Xiaomi had hoped to raise $10 billion with the Hong Kong IPO, making it the biggest since Alibaba’s $25 billion New York debut in 2014 and valuing the company at about $100 billion.
However, the firm is offering 2.18 billion shares at HK$17-HK$22 apiece, according to Bloomberg News, which values it at about $53.9-$69.8 billion.
Xiaomi had hoped to be the first company to list shares in Hong Kong at the same time as launching new Chinese Depository Receipts (CDRs) in Shanghai under new rules announced in April by mainland authorities to open up markets in the world’s number two economy.
But on Tuesday it put off its decision on listing the CDRs until it completes its IPO in Hong Kong. The China Securities Regulatory Commission said it has canceled a listing review originally scheduled for June 19.
This delay, as well as differing market views about Xiaomi’s business model, were also among reasons for the lower valuation.
CEO Lei Jun claimed it was an Internet services company making money via online games and advertisements despite 70 percent of its revenues coming from selling hardware, particularly smartphones.
The firm, which mainly sells cheap but high-quality smartphones in China, is looking to push into Europe — recently opening its first flagship store in Paris — as the home market reaches saturation point.
China Mobile and US wireless-chip giant Qualcomm are among the cornerstone investors and it is expected to list on July 9.
Chinese authorities devised the CDR program, under which homegrown companies listed abroad can simultaneously list at home, after watching technology heavyweights Alibaba and Baidu list on Wall Street.
The objectives of the plan include helping to develop China’s still relatively immature and volatile share markets while allowing domestic investors to invest in the country’s big tech champions.
Alibaba and Hong Kong-listed Tencent have expressed an interest in the plan.
Xiaomi shipped 28 million smartphones worldwide from January to March, an 88-percent surge year-on-year.
That was fourth in the world after Samsung, Apple and China’s Huawei, according to figures from the International Data Corporation.