BEIJING Reuters Chinas imports leapt in August, boding well for a strengthening of domestic demand in an economy that has become a major driver of global growth.
The unexpectedly big increase in imports also dented Chinas politically contentious trade surplus ahead of U.S. Congressional hearings next week on whether to punish Beijing for what many in Washington see as an unfairly undervalued yuan.
Wang Hu, an economist with Guotai & Junan Securities in Shanghai, said the import figures along with robust car sales data suggested that Chinas economy had touched bottom in August.
"As European and U.S. economic growth has slowed since the second quarter, China may again lead the global recovery," Wang said.
Imports jumped 35.2 percent in August compared with a year earlier, easily beating Julys 22.7 percent rise and market forecasts of a 26.1 percent increase, the General Administration of Customs said on Friday.
Annual export growth slowed to 34.4 percent in August from 38.1 percent in July but was close to expectations of a 35.0 percent rise.
That left China with a trade surplus of $20.0 billion, still eye-popping but down from $28.7 billion in July and well below the median forecast of $27.1 billion.
Economic growth had slowed over the first half of the year in response to government steps to rein in bank lending, deter property speculation and close obsolete, energy-guzzling plants in sectors such as steel and cement.
Such heavy industries have been running down their inventories, further dampening growth, but the import figures suggest this trend was petering out somewhat, said Qian Wang, an economist with J.P. Morgan in Hong Kong.
YUAN UNDER SCRUTINY
Financial markets were unimpressed by the resilience shown by China, which by some estimates has already overtaken Japan as the worlds second-largest economy.
Chinas export performance indicates global demand remains strong, for now, but investors remain worried about a sharp slowdown in the United States and anemic growth in much of Europe.
Asian stocks outside Japan .MIAPJ0000PUS were flat after surrendering early gains, while the Australian dollar, which is sensitive to Chinese growth prospects, retreated from a four-month high. Shanghai stocks .SSEC ended the morning 0.63 percent lower.
Dong Xianan, chief macroeconomist with Industrial Securities in Beijing, said the data implied a strong rebound in domestic demand.
"A possible reason is that China increased imports of raw materials in the last week of August driven by political pressure as well as low global commodity prices," he said.
U.S. lawmakers will hold hearings next week on whether to punish Beijing for what many in Washington see as an unfairly undervalued yuan.
Larry Summers, President Barack Obamas chief economic adviser, visited Beijing this week for talks with President Hu Jintao and other high-ranking Chinese officials.
After the meetings, China and the United States both put an optimistic face on ties that have been jolted by economic and security tensions as well as disagreements over the yuans exchange rate.
Coincidentally or not, the Chinese central bank let the yuan climb on Friday to its highest level since it was depegged from the dollar on June 19. Still, the yuan has gained less than 1 percent against the U.S. currency since then.
Moreover, Chinas rolling 12-month trade surplus widened in August to $177.1 billion from $172.8 billion, handing ammunition to critics who say the country is fixated on exports and is fueling unhealthy global economic imbalances.
"Chinas strong export growth and high trade surpluses weakens the argument that China cannot cope with currency appreciation, and should reinforce the case of those policymakers who argue that such a move would help address Chinas domestic policy challenges while also reducing the potential for trade tensions," Brian Jackson, an economist with Royal Bank of Canada in Hong Kong, said in a note. Additional reporting by Langi Chiang; Writing by Alan Wheatley; Editing by Ken Wills & Kim Coghill
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