State media reports that China's exports rose 17.7% in December, which indicates that the country has overtaken Germany as the world’s largest exporter

The rise compared with a year earlier, at the height of the recession, breaks a 13 month’s decline in trade due to the lack of external demand. Total exports, although down by 13.9% overall in 2009 compared with 2008, were said to be valued at $1.2 trillion. The figures suggest that demand in the developed world is gaining traction and confirms that the China’s manufacturing base is once again expanding (as was indicated by the PMI indices released last week). It should be noted though that the 17.7% rise is measured against a particularly low base back in December 2008.

From a buyer’s perspective, we would expect to see producer price inflation begin to reappear especially across commodities that are in high demand, such as copper, as well as renewed calls from China’s global trading partners that the RMB is undervalued.