China's imports and exports were much stronger than expected in November, robust numbers that could clear the way for the central bank to raise interest rates as soon as this weekend.
The data on Friday also offered a double-hit of healthy news for the global economy: a reminder that Chinese demand was still growing apace and an indication that the U.S. and European recoveries were picking up steam.
China has been slow to tighten monetary policy this year, partly for fear of a double-dip recession in the developed world.
But with inflation now running at its fastest clip in more than two years and external demand on a firmer footing, many analysts are looking for a more aggressive mix of rate rises, lending restrictions and higher reserve requirements for banks.
Resilient trade is supportive to increase policy tightening, and China's economic policy is shifting from growth to taming inflation, mopping up liquidity and curbing asset bubbles, said Isaac Meng, an economist with BNP Paribas in Beijing.
November imports rose 37.7 percent from a year earlier to easily top forecasts for a 24.2 percent increase, powered by China's voracious appetite for commodities.
Chinese imports have developed a habit over the past two years of surprising on the upside. In that respect, the 34.9 percent jump in exports, above market expectations for a 22.0 percent increase, was the bigger surprise.
It shows the U.S. economy is recovering well, said Wang Han, an economist at CEBM in Shanghai. The central bank will raise reserve requirements this weekend and then interest rates next week.
China's export strength was broad-based. Exports to the United States were up 32.2 percent, the strongest rise since August. Shipments to the European Union, its biggest trading partner, climbed 33.8 percent.
On an annualized, seasonally adjusted basis, China's month-on-month export growth soared to triple digits, economists at Goldman Sachs said.
The trade data boosted the main Chinese stock index to close up 1.1 percent at 2,841.04. It had been flat before the release of the data.
PRESSURE ON YUAN
The volume of imports and exports both set monthly records, the customs authority said in a statement.
That left China with a hefty surplus of $22.9 billion in November, the seventh straight month of impressive trade performance. During that stretch, its average surplus has been $22.2 billion.
That could fuel fresh criticism of China's exchange rate regime. The United States and Europe say that an undervalued currency gives Chinese exporters an unfair advantage in global markets.
Even without criticism, rising inflation in China could put upward pressure on the yuan.
The trade surplus data comes at a time when domestic inflation is rising, indicating that the pace of yuan appreciation against the dollar could quicken next year, said Lu Zhengwei, an economist at the Industrial Bank in Shanghai.
Chinese consumer price inflation may have hit 5.1 percent in the year to November, a 28-month high, state media reported on Friday.
China's leaders on Friday opened the three-day Central Economic Work Conference, a gathering where they will set the policy direction for next year.
The Politburo, the Communist Party's ruling body, set the tone for the meeting last week when it announced a shift to a prudent monetary policy from the appropriately loose stance of the past two years.
The Politburo also repeated a long-standing pledge to bring China's trade into better balance by promoting imports.
The trade surplus has in fact fallen over the past two years, a product of both weakening external demand because of the global financial crisis and Chinese demand steadily increasing on the back of the economy's strength.
The trade surplus is on track to drop to around $190 billion this year, a reduction of nearly 40 percent from a peak of $295.5 billion in 2008.
Central bank data showed Chinese banks extended 564 billion yuan in new loans in November and M2 money supply rose in the month by 19.5 percent from a year earlier.
In separate data, the National Bureau of Statistics said property prices edged up 0.3 percent in November from a month earlier, while real estate investment rose 36.7 percent from a year earlier.
The property sector has borne the brunt of China's tightening this year, with the government determined to root out speculation.
Analysts said the buoyant figures should help ease worries about the possibility of collateral damage to the economy from the measures to cool the red-hot housing market. (Additional reporting by Alan Wheatley and Huang Yan; Writing by Simon Rabinovitch; Editing by Ken Wills and Neil Fullick)