UPDATE 3-China’s imports leap, cutting trade surplus

* Aug exports +34.4 pct y/y (f/c +35.0 pct) vs +38.1 pct
July

* Imports +35.2 pct (forecast +26.1 pct) vs 22.7 pct in
July

* Trade surplus $20.0 bln (f/c $27.1 bln) vs $28.7 bln July

* Data comes as U.S. Congress readies hearings into yuan
(Updates market close, adds details)

By Zhou Xin and Simon Rabinovitch

BEIJING, Sept 10 (BestGrowthStock) – China’s imports leapt in
August, boding well for a strengthening of domestic demand in
an economy that has become a major driver of global growth.

The unexpectedly big increase in imports also dented
China’s politically contentious trade surplus ahead of U.S.
Congressional hearings next week on whether to punish Beijing
for what many in Washington see as an unfairly undervalued
yuan.

Wang Hu, an economist with Guotai & Junan Securities in
Shanghai, said the import figures along with robust car sales
data suggested that China’s economy (Read more about the fastest growing economy.) had touched bottom in
August.

“As European and U.S. economic growth has slowed since the
second quarter, China may again lead the global recovery,” Wang
said.

Imports jumped 35.2 percent in August compared with a year
earlier, easily beating July’s 22.7 percent rise and market
forecasts of a 26.1 percent increase, General Administration of
Customs data showed on Friday.

Annual export growth slowed to 34.4 percent in August from
38.1 percent in July but was close to expectations of a 35.0
percent rise.

That left China with a trade surplus of $20 billion, still
eye-popping but down from $28.7 billion in July and well below
the median forecast of $27.1 billion. [ID:nSGE6820DG]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on China trade trends: http://link.reuters.com/byj62p Manufacturing rebound tough to sustain [ID:nLDE6800T1] Bears bet time running out for China to change[ID:nSGE67U02V] A rosy view of China in 2020 [ID:nSGE67G05I] U.S. losing competitiveness, China gains [ID:nRTV141763] For more stories on China's economy (Read more about the fastest growing economy.) [CN-MCE-M-LEN]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Growth had slowed over the first half of the year in
response to government steps to rein in bank lending, deter
property speculation and close obsolete, energy-guzzling plants
in sectors such as steel and cement.

Housing prices have been steady since June, the government
said on Friday, a sign that its measures to cool the property
market have been successful. [ID:nTOE68806Y]

Heavy industries have also been running down their
inventories, further dampening growth, but the import figures
suggest this trend was petering out somewhat, said Qian Wang,
an economist with JPMorgan in Hong Kong.

YUAN UNDER SCRUTINY

Financial markets were moderately impressed by the
resilience shown by China, which by some estimates has already
overtaken Japan as the world’s second-largest economy.

Asian stocks outside Japan (.MIAPJ0000PUS: ) were up 0.2
percent, while the Australian dollar, which is sensitive to
Chinese growth prospects, finished at a four-month closing
high. Shanghai stocks (.SSEC: ) ended the day up 0.26 percent.

Dong Xian’an, chief macroeconomist with Industrial
Securities in Beijing, said the data implied a strong rebound
in domestic demand.

“A possible reason is that China increased imports of raw
materials in the last week of August driven by political
pressure as well as low global commodity prices,” he said.

Analysts polled by Reuters expect the Chinese economy to
grow 10 percent this year before slowing to a 9 percent pace
next year.

U.S. lawmakers will hold hearings next week on whether to
punish Beijing for what critics say is a policy of holding the
yuan down to gain unfair trade advantage (CNY=CFXS: ).

Larry Summers, President Barack Obama’s chief economic
adviser, visited Beijing this week for talks with President Hu
Jintao and other high-ranking Chinese officials.

After the meetings, China and the United States both
offered an optimistic take on ties that have been jolted by
economic and security tensions as well as disagreements over
the yuan’s exchange rate. [ID:nTOE68707N]

Coincidentally or not, the Chinese central bank let the
yuan climb on Friday to its highest level since it was depegged
from the dollar on June 19. Still, the yuan has gained less
than 1 percent against the U.S. currency since then.
[ID:nECB000509]

Moreover, China’s rolling 12-month trade surplus widened in
August to $177.1 billion from $172.8 billion, handing
ammunition to critics who say the country is fixated on exports
and is fuelling unhealthy global economic imbalances.

“China’s strong export growth and high trade surpluses
weaken the argument that China cannot cope with currency
appreciation, and should reinforce the case of those
policymakers who argue that such a move would help address
China’s domestic policy challenges while also reducing the
potential for trade tensions,” Brian Jackson, an economist with
Royal Bank of Canada in Hong Kong, said in a note.
(Additional reporting by Langi Chiang; Writing by Alan
Wheatley; Editing by Ken Wills & Tomasz Janowski)

UPDATE 3-China’s imports leap, cutting trade surplus