China exports up first time since June 2015

 

The depreciation the Yuan hasn’t helped China’s collapsing stock markets, but it seems to have boosted exports. Trade by the world’s second biggest economy grew in December for the first time since June.

China’s exports exceeded expectations in the last month of 2015, rising 2.3 percent from a year ago in Yuan-denominated terms.

Last year, Beijing’s exports were down on cooling demand and plummeting commodities prices.

“The figures are much better than anticipated by most analysts.  I think the pick-up in export is due largely to the devaluation of the Yuan,” Kamel Mellahi, Professor of Strategic Management at Warwick Business School and an expert on China, said.

“A weaker Yuan can help China shore up economic growth by boosting exports but at the same time, as we have seen over the last couple of weeks, it creates volatility in financial markets.”

Imports collapsed not as much as had been predicted. In Yuan-dominated terms, they fell four percent, compared to the expected 7.9 percent.

In yearly terms, Chinese exports fell 1.8 percent with imports collapsing 13.2 percent from 2014.

In the first week of 2016, China’s central bank depreciated the Yuan against the dollar by more than 1.5 percent. It was the biggest drop in the Yuan exchange rate since August 2015, when the devaluation of the Yuan made global stock markets quake.

The depreciation has raised fears that other Asian countries would also devalue their currencies to compete with Beijing’s exports.

The People’s Bank of China has strengthened the Yuan this week to calm volatility in equity markets. However, the Shanghai Stock Exchange Composite Index lost another 2.42 percent on Wednesday with overall an almost 17 percent drop this year.