China just gave the clearest signal yet that its economy is bouncing back

Photo: Getty Images.

If there was any doubt the Chinese economy is humming again, it’s surely been dispelled today.

Chinese trade data has beaten across the board in October, a good sign for not only its economy but global demand as a whole.

According to China’s General Administration of Customs, the value of both imports and exports increased from a year earlier in US dollar terms, the first time that’s been seen since October 2014.

Exports increased by 0.1%, an improvement in the 7.3% decline seen in the 12 months to October and stronger than the 5.0% contraction expected.

It was the first time since March this year that the value of exports increased in year-on-year terms.

In yuan-denominated terms, and reflective of the strength in the US dollar over the past year, the value of exports grew by a stronger 5.9%.

The news was even better on the other side of the ledger with the value of imports increasing by 6.7% from a year earlier, the fastest expansion reported since September 2014.

In yuan-denominated terms, that figure swelled to 13% over the same period.

In volume terms, copper, crude oil, iron ore and coal imports all surged, partially in response to the Golden Week holiday in early October.

Copper imports jumped to 380,000 tonnes, up from 290,000 tonnes in October, while crude oil imports surged to 32.35 million tonnes from 28.79 million tonnes reported previously.

Iron ore and coal imports increased to 91.98 and 26.97 million tonnes respectively, up from 80.8 and 21.58 million tonnes a month earlier.

With the value of imports slightly outpacing the increase seen in exports, the nation’s trade surplus narrowed to $US44.61 billion, down from $US49.06 billion in October.

Markets had been expecting the surplus to narrow to $US46.3 billion.

The rebound in both exports reflects improved demand, not only for raw materials but also for Chinese-made goods abroad.

It also reflects the recovery in commodity prices seen in 2016, helping to stir inflationary pressures after years of disinflation and, in some instances, outright deflation.

Indeed, according to data released by the NBS last month, producer price inflation (PPI) grew by 1.2% year-on-year in October, the fastest 12-month increase seen since December 2011.

Reflective of improved demand, Chinese manufacturing PMI — a gauge on activity levels in the sector from one month to the next — jumped to 51.7 in November, the equal highest reading since April 2012.

It all points to an economy that is strengthening heading into 2017.

“The improvement reflects a strengthening in global demand, with recent business surveys suggesting that developed economies are on track to end the year on a strong note,” said Julian Evans-Pritchard, China economist at Capital Economics.

However, whether that momentum can be maintained will likely be determined by the actions taken by US president-elect Donald Trump once he takes office.

During his presidential run, Trump said he would label China as a currency manipulator, promising to slap a tariff of 45% on Chinese exports entering the US.

Should Trump follow through with this threat, it’s highly unlikely that the recent improvement will last.

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