China’s December trade shrinks but less than November

China’s trade surplus could have been slightly larger in December if Chinese imports from Hong Kong were not so strong, which may be a sign of capital outflows disguised via over-invoicing of imports, says the report. While the factors that have driven prices almost 18 per cent lower this year are a concern, and are hurting exporters and energy company shares, lower oil and gas costs are a boon for many resource-scarce Asian economies.

China’s central bank set a firmer midpoint rate for the yuan, signalling determination to hold the line against expectations of a sustained depreciation of a currency that has lost 5 per cent of its value against the dollar since August. Yesterday US benchmark West Texas Intermediate was up 1% and Brent gained 0.5%.

The slump in Chinese equities followed small gains on Thursday, when shares rose amid speculation that government-backed funds had reportedly stepped in to buy shares. China’s imports of high-tech products increased 0.7 percent in 2015 year on year.

If you believe the latest headlines, China’s trade data for December 2015 was simply excellent: exports rose 2.3 percent compared to December of 2014, and imports only dropped 4 percent.

Exports fell 1.8 per cent year on year to 14.14 trillion yuan in 2015, while imports declined 13.2 per cent to 10.45 trillion yuan.

Fears over China’s weakening economy will remain one of the “dominant forces” in global markets he said, arguing that equities were unlikely to stage the same “big relief rally” they enjoyed previous year.

Total turnover on the two bourses stood at 538.3 billion yuan (82.01 billion US dollars).

Dealers were also buoyed by the central People’s Bank of China’s decision not to lower its yuan fixing against the dollar.

Despite the larger than expected trade surplus, China’s official foreign reserves declined by a record US$108 billion in December to US$3.33trillion.

USA crude jumped nearly a dollar to $31.25 a barrel, a day after breaching the $30 barrier for the first time in 12 years.

Shanghai fell yesterday, bucking a regional trend that saw markets rise in the wake of upbeat Chinese trade data that provided some much-needed respite from a volatile start to 2016. “Policymakers are embracing a more flexible” foreign exchange regime, making “high volatility” the theme for the yuan in 2016, the bank said in a recent report.