The growing economic might of China was laid bare yesterday by reports that it overtook Germany to become the world's largest exporter last year.
The strong export data for December follows the news on Friday that China had leap-frogged the US as the world's largest automotive market.
China is also forecast to outgun Japan to become the world's second largest economy in 2010, and it is inevitable it will take top spot from the US, given that Chinese GDP is forecast to grow by more than 10 per cent a year for most of the next decade.
Citing China's customs office, Chinese state media said the country's exports rose by 17.7 per cent to $130.7bn in December, compared to a year ago, and well ahead of an expected 4 per cent uplift. The world's third-largest economy's jump in exports after a 13-month decline signals that its manufacturers are over the worst after being badly buffeted by the global slump in demand for their products.
However, the buoyant data is likely to lead to new demand from China's competitors to devalue its currency, the yuan. South Korea and Taiwan have also reported a resurgence in exports in December, with growth of 46.9 per cent and 33.7 per cent respectively.
Huang Guohua, a statistics official with the Chinese General Administration of Customs, said the uplift in exports in December was an "important turning" point for the export sector. "It is safe to say now that Chinese exporters have come right through the period of weakness," he told Reuters.
While the data suggests that China will overtake Germany's total export haul for 2009, this will not be confirmed until full-year data for Europe's biggest economy is published in February.
But China's exports were actually surpassed by storming imports, which rose by more than expected at 55.9 per cent a year to $112.3bn. This squeezed the world's most populous country's trade surplus down to $18.4bn, compared with $19.1bn in November.
Lin Songli, an economist with Guosen Securities in Beijing, told Reuters: "If exports and imports were as strong as that, then other economic indicators like industrial output would have been surprisingly strong as well."
He added: "It's hard to say the government will take action on one month of data, but if the situation stays the same for the first quarter, Beijing is likely to let the yuan rise again at the end of March."
But Guosen Securities forecasts that the yuan will appreciate by a modest 3 per cent in 2010, as the Government is keen for exports to continue growing. The US has led the criticism of China that it has unfairly made its goods cheaper by maintaining a weak yuan. But the Chinese Prime Minister, Wen Jiabao, has hit back, saying the country will "not yield" to its competitors' demands to revalue the currency.
Meanwhile, data on Friday showed that China had overtaken the US in sales of cars. According to the China Passenger Car Association, Chinese consumers bought more than 13.5 million in 2009. In contrast, 10.4 million cars and light trucks were sold in the US, the worst for the American automotive industry in 27 years.
China's market grew by 45 per cent year-on-year. Rao Da, secretary general of the China Passenger Car Association, said: "This is even better than anyone expected."
In October, China's official news agency forecast that the country will overtake Japan this year to become the world's second-biggest economy. The Chinese economy grew by 9.6 per cent in 2008, and is estimated to have expanded by more than 8 per cent last year — far outstripping its neighbour. But Japan emerged out of recession in the third quarter of 2009.