Trade balance narrowed to $29.15 billion, but was wider than expectations of $24.7 billion.
Trade data is widely considered to be one of the most reliable economic indicators in China. And hard landing watchers closely track import data because it centres on investments and has a domestic demand component to it.
But the January number should be taken with a grain of salt since it is largely influenced by the Chinese New Year holiday.
“They could be heavily distorted by the [Chinese New Year] holidays (note there are 22 working days in Jan this year versus 17 in Jan last year),” wrote Bank of America’s Ting Lu in a note to clients earlier this month.
“We also suggest investors to take a pinch of salt on the actual readings in these two months. A more sensible approach is to read Jan and Feb together, just as China’s NBS does on major economic data such as IP and FAI.”
Ting writes that export and import growth have bottomed out, but is cautious about export growth in 2013 because of weakness in the U.S., eurozone and Japanese economies. He does however think imports could rise significantly driven by domestic demand and rising commodity prices.
For 2013, he expects import to rise 7.9 per cent, and import to rise 11.5 per cent.
Updated to add latest comments from Ting Lu on 2013 trade outlook.
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