Thursday, March 11, 2010

China's Most Rapid Exports Growth in 3 Years: China Is World's Largest Exporter, Vale to Benefit

Another sign of a strong global economic recovery: Chinese exports rose higher than expected in February and recorded the most rapid growth of the last three years.

China since February is the world's largest exporter and its shipments are a good barometer of the productive activity in other countries, particularly of its main markets, the United States, Europe and Asia.

Foreign trade data released yesterday point to the consolidation of Chinese growth, with an increase of 45% of imports. The percentage is lower than the spectacular increase of 85.5% in January, but is within the analysts' forecasts. The increase in exports was 46%, more than double the 21% recorded the previous month.

Stephen Green, chief economist at Standard Chartered in China says that "Trade figures show a continued strong recovery in China and the world,", adding that the highest growth occurred in shipments to Asia (excluding Japan), Latin America, Africa and the Middle East, which reflects the recovery of developing countries.

The emergents' continued recovery in 2010 will have positive impact on exports from China, said the economist.

Wang Tao, chief economist at UBS in China, noted that exports to the United States, European Union and Japan accounted for half the expansion in February and begin to approach the rate of growth in shipments to emerging countries. His expectation is that Chinese exports to grow between 25% and 40% in the coming months, taper off in the second half and close the year with an increase of 15% to 20%. In his assessment, net exports should contribute 0.5% of GDP growth in 2010, which most analysts believe will be 9% to 10%.

China has slowed the import of iron ore in February compared to the levels of the second half of 2009. Iron ore is the main agenda item of export from Brazil to China. Still, the purchases rose by 6% to 49 million tonnes, which could give ammunition to mining companies with regards to price negotiations with the Chinese in 2010.

According to Mr. Green, the February numbers indicate that demand for steel from China for iron ore "remains high".

The obvious Brazilian company to potentially benefit is VALE, which is also the target of foreigners who are once again flooding the Brazilian stock exchange Bovespa.

(With news from Agencia Estado in Brazil)

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