China is World's Largest Exporter

For more than a year China experienced diminishing exports. It was mainly due to the economic recession leading to less demand. But December 2009 saw Chinese exports mount by 17.7%. December exports clocked $130.7 billion, which resulted in the year's total of $1.2 trillion. This put China ahead of Germany as the world's top exporting nation. Germany's exports for January to November stood at $1.05 trillion, just a little under Chinese exports of $1.07 trillion. China relies very heavily on exports and this was a welcome change for them.

Andy Rothman, CLSA's Chief China Economist said, "A resumption of export growth was necessary before Beijing restarted its policy of gradual appreciation of the Chinese currency, suspended over a year ago in the heat of the crisis. Beijing is unlikely to act on one month's figures alone. But if the export recovery continues, China's leaders would have the political cover they needed to resume renminbi appreciation by mid-year, with a possible appreciation of 3% for 2010. Beijing has been waiting for three things to happen before resuming gradual appreciation: strong economic recovery in China (which we now have); stability in the US and European economies (which we have); and several months of Chinese export growth in positive territory, which is important to sell appreciation to the domestic audience." Huang Guohua, Head of Customs Bureau's Statistical Analysis Department said, "This is an extremely important turning point. Our nation's foreign trade had been falling for 13 consecutive months but is now growing. Our nation's exporters have emerged from their downslide."

China had used a stimulative fiscal policy in 2009 to push up sales of cars in the country. The purchase tax on smaller cars was halved. This led to a rise of 45% sales in Chinese passenger cars. Vehicle sales stood at 13.6 million, making China the biggest vehicle market in the world. Now market analysts and experts believe that with such a dramatic resurgence in China's trade, its government will be under pressure to let its Yuan appreciate.