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China powers on to snatch trade mantle from the United States

13 Feb 2013 THE AGE
BY GARRY WHITE


CHINA has leapfrogged the US to become the world's biggest trading nation, bringing an end to the US's postwar dominance of global commerce.

The total value of US exports and imports last year was $US3.82 trillion, the US Commerce Department has revealed. China's customs administration has already announced that the country's total trade last year was worth $US3.87 trillion.

"It is remarkable that an economy that is only a fraction of the size of the US economy has a larger trading volume," Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington, told Bloomberg.

"The surpassing of the US is not because of a substantially undervalued currency that has led to an export boom," Mr Lardy said, pointing out that Chinese imports have grown at a faster rate than exports since 2007.

Not only has China managed to post a larger total trading figure, but the breakdown of imports compared with exports also makes for favourable reading in Beijing. China had a full-year trade surplus of $US231 billion with the US posting a total 2012 trade deficit of $US727.9 billion.

Indeed, the Asian powerhouse looks set to table an even better performance this year, as trade accelerated substantially last month. Exports jumped 25 per cent on a year-on-year basis and imports were up 29 per cent in January, beating analysts' expectations. However, the data is distorted by the timing of the Chinese New Year festivities.

Last year's Lunar New Year shutdown began in January, leaving fewer work days and boosting this year's figures by comparison.

Sales of passenger cars over the month soared to their highest ever. China's car sales jumped 46.4 per cent compared with January last year to a record monthly high of 2.03 million, the China Association of Automobile Manufacturers said.

The data is helping to ease fears that China could face a slump, but some remain worried. The French bank Societe Generale said last month there was still a chance of a "hard landing" with growth dropping below 6 per cent, dangerously low for China.

"A deceleration is likely by the end of the year if further stimulus measures are not forthcoming, which they probably won't because of latent inflation pressures," Alaistair Chan, an economist at Moody's, said last week.

But the data has reassured some. "Overall this says there is no need to worry about the strength of China's recovery," said Sun Junwei, China economist at HSBC in Beijing.

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