Strong China January import-export trade shows economy's rebound intact

China publishes the bulk of its economic data for January and February combined in March to smooth the effects of the annual shift in the Lunar New Year holidays when many factories shut for at least a week and often longer. The holiday fell in January in 2012 and will be in February this year.

DOMESTIC DEMAND STRONG

The strength of imports and what that implied for the health of the domestic economy that was most telling to Tao Wang, China economist at UBS in Hong Kong.

"It seems to me that imports were particularly strong and that reflects two things: one is that the domestic demand, in particular investment demand, is very strong. The second thing is that it seems that companies are restocking ahead of the Chinese New Year and ahead of the peak season in March and April," she said.

Imports from the United States soared 49.7 percent, those from ASEAN jumped 36.5 percent and imports from the European Union rose 20.7 percent. Imports from Taiwan rocketed 74.8 percent, making the 12.9 percent rise in imports from Australia look anaemic.

Analysts in general, however, are wary of reading too much into data coming just one month after the world's second-biggest economy posted its slowest full-year expansion since 1999 at 7.8 percent.

Ting Lu, head of Greater China economics at Bank of America/Merrill Lynch, was particularly cautious in his reading of the trade data, noting that import prices were rising in tandem with China's recovery. Iron ore, for example, has surged 79 percent from September 2012 - the bottom of China's 2012 growth cycle.

Lu forecasts 2013 export growth unchanged from the 7.9 percent pace in 2012, but thinks import growth could rise to 11.5 percent from 4.3 percent in 2012 as prices rebound.

INFLATION RISKS

An uptick in imported inflation already appears to be on the mind of the central bank, even though economists expect it to remain subdued through the first quarter of the year and unlikely to breach 3.5 percent in 2013, a level they think the government will soon announce as its target.

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