China's economic recovery continues with exports and commodities booming

China was already pulling further ahead of other major economies in November
China’s economic recovery continued in December, underpinned by booming global demand for exports, rising commodity prices and a rallying stock market.

 

That’s the outlook from the latest aggregate index combining eight early indicators tracked by Bloomberg, which was unchanged from last month.

 

China was already pulling further ahead of other major economies in November, with domestic demand growing, foreign investment rising and record export demand propelling growth even as other major nations struggle amid soaring virus cases. With the Communist Party signaling there won’t be a sudden withdrawal of monetary and fiscal assistance, there’s growing confidence for a healthy expansion in 2021.

 

The export boom has been one of the strong drivers for China’s rebound, with goods shipments hitting a record $268 billion in November. That strength looks set to continue this month, with Korean exports rising 1.2% in the first 20 days of the month and an index tracking the cost of shipping a container of goods reaching an all-time high last week.

 

There’s so much demand for containers to ship products from China to the US that some companies are sending empty boxes back to Asia. Shipments to the US’s busiest seaport in Los Angeles are expected to remain robust until at least early March.

 

Smaller, export-oriented firms have outperformed their peers on the back of that demand, with an index tracking their current performance rising to a record-high 58.1, according to Standard Chartered, which surveys more than 500 small and medium-sized companies in China each month.

 

An increase in the indexes for new export orders and production show “strong external demand and improved production capacity amid a Covid resurgence elsewhere,” according to the report from Lan Shen and Shuang Ding at Standard Chartered.

 

However, expectations for next year eased, possibly due a pullback in holiday demand and the upcoming Lunar New Year in February, they wrote. The main index for small companies slipped to 52.7 in December from 52.9 a month earlier. Numbers above 50 indicate improvement.

 

There might also be an improvement this month in the factory-price deflation that has plagued Chinese firms this year, with Bloomberg’s tracker for factory prices improving to -0.3 per cent in December, the highest level since February.

 

“The PPI tracker is based on market commodity prices, so the recent rise in commodity prices, such as copper, coal and iron ore, should have raised it significantly,” Bloomberg economist David Qu said.    



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel