China to Show Slow recovery the year

China’s economy has been trapped in its worst slowdown in three years, growing ”just” 7.4 per cent between July and September to mark the seventh consecutive quarter of slowing growth.

But analysts are hopeful that a gentle recovery is imminent. A Reuters poll showed economists expect data out next week to show China’s economic expansion picked up slightly in the fourth quarter to hit 7.8 per cent.

The gradual rebound would be led by strengthening domestic demand, economists say, with trade remaining an Achilles’ heel.

Europe, mired in its debt crisis and a recession, has posed the strongest headwinds to China’s trade sector. Bilateral trade with the European Union fell 3.7 per cent in 2012 from a year ago even though export sales recovered in December.

On an annual basis, exports to the European Union climbed 1.9 per cent last month in their first rise in seven months.

Shipments to the United States, which overtook Europe as the top buyer of Chinese goods this year, also improved in December to rebound 9.6 per cent, reversing from a 2.6 per cent drop the month before.

“We’re hitting a low base for the next several months, so that means the headline will be looking OK for December and for the first quarter,” said Kevin Lai, an economist at Daiwa in Hong Kong. “I suspect that smartphone shipments were still quite strong into December given new launches that month. The picture is still more mixed regionally.”

China’s trade sector, a key part of the economy that supports an estimated 200 million jobs.

Net exports from China have subtracted from growth in its gross domestic product (GDP) since March 2011, and had shaved 0.4 percentage points off GDP expansion in the third quarter.

With Europe expected to sink deeper into recession this year, analysts say it is another difficult year for Chinese trading firms.