Chinese demand drives regional recovery

By Kevin Brown in Singapore and Justine Lau in Hong Kong

Published: January 7 2010 06:37 | Last updated: January 7 2010 15:53

Containers at a Shanghai port: imports are making up for falling demand for consumer products in North America and elsewhere

Asian exports to China soared at the end of last year according to a slew of data released on Thursday, suggesting that Chinese demand is emerging as a stronger than expected engine of economic recovery in the region.

The biggest jump came in South Korea, which said December exports to China jumped 94 per cent compared with the same month a year ago. Taiwan reported a 91.2 per cent jump in the value of shipments for December, and Malaysia said exports jumped 52.9 per cent in November from a year earlier.

The strong demand from China compared with generally falling exports to the US and Japan, although shipments to the European Union were generally higher. Malaysia said exports to the US fell by 13 per cent, and to Japan by nearly 30 per cent.

Overall export performance was more mixed, with South Korea reporting a rise of 33.67 per cent and Taiwan up 46.9 per cent while Malaysia was down 3.3 per cent.

Australia said it suffered a 2 per cent drop in exports in November from the same period a year earlier, and New Zealand said exports in the same month were down by 16.7 per cent.

However, economists said it was becoming clear that China’s strong economic growth in 2009 had generated much stronger consumer demand for Asian products than forecast.

Frederic Neumann, an economist at HSBC in Hong Kong, said the size of the spike in exports to China in Thursday’s data was in part a reflection of the size of the falls in exports as the global financial crisis developed. However, Mr Neumann said there was “plenty of evidence” that Chinese demand for consumer products such as flat television screens had replaced a large part of the falling demand in North America and elsewhere.

“Going into this crisis we never thought that, if China recovered, it would suck in imports from other Asian countries on a scale that could play a serious role in generating regional economic recovery, but that seems to be what is happening,” he said.

The export figures follow data earlier this week showing that industrial production around the region is recovering fast, with both China and India seeing significant improvements in manufacturing sentiment.

In spite of the poor Australian export numbers, the Australian currency rose as much as 0.75 per cent to $0.9268 as the country’s outlook was further boosted by much stronger than expected retail sales .

November retail sales climbed 1.4 per cent from October, compared with a rise of 0.4 per cent a month earlier, according to the Australian Bureau of Statistics. The increase was more than four times the consensus economic forecast.

The ABS said sales rose across all industry groups, with clothing, footwear and other accessory retailing reporting the strongest growth at 2.5 per cent.

“Everybody seems to be booming,” said Tim Condon, Asia chief economist at ING in Singapore. “I think the trend is likely to continue into the first half of 2010. I don’t really see anything stopping it.”

Additional reporting by Song Jung-a in Seoul

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