BEIJING -- China's trade surplus rose and inflation eased in January, official data showed Friday, adding to recent evidence the world's No. 2 economy is emerging from a drawn-out downtrend.

The economy expanded last year at its lowest annual rate since 1999, in the face of weakness at home and in key overseas markets. But an uptick in the final three months of 2012 snapped seven straight quarters of slowing growth.

And conditions continued to improve in January, according to the government.

The trade surplus rose 7.7% year-on-year to $29.2 billion for the month, the General Administration of Customs said in a statement, beating a median $26.6 billion forecast of economists in a Dow Jones Newswires survey.

January exports jumped 25% percent to $187.4 billion, while imports soared 28.8% to $158.2 billion, said Customs.

At the same time inflation slowed to 2% in January, the National Bureau of Statistics said, easing from a seven-month peak of 2.5% in December.

The trade growth rates were also above market estimates of 17.5% for exports and 23.5% for imports, according to Lu Ting and Zhi Xiaojia, analysts at Back of America Merrill Lynch in Hong Kong.

But Customs noted that there were more working days last month than in January 2012, due to the timing of the Lunar New Year, affecting the figures.

After taking out factors linked to the holiday, exports grew 12.4% last month year-on-year while imports increased 3.4%, it added.

Even so Zhang Zhiwei, a Hong Kong-based economist with Nomura International, argued there was a broader base for the strong export performance in January than the new year date issue.

"These data suggest that external and domestic demand are both strong, which supports our view that the economy is on track for a cyclical recovery in the first half (of this year)," he said in a research note.

Seasonal factors also affected inflation, with the consumer price index — a main gauge of inflation — rising 1% month on month, its highest increase in a year, as prices jumped in the lead-up to the holiday.

Sun Junwei, an economist with HSBC in Beijing, expected prices to spike this month but to stay under control as the country's economic recovery is yet to gain traction.

"Barring any significant supply-side shock, the future inflation rebound is likely to be manageable thanks to the much more modest growth recovery," she said.

The Chinese economy grew 7.8% last year but ticked up to 7.9% in the October to December period.

Manufacturing activity in China continued to gain traction in January, with the purchasing managers' index — a widely watched barometer of the health of China's economy — hitting a two-year high of 52.3, according to a survey by HSBC.

Nonetheless, analysts warned of potential risks in overseas demand with the developed world still grappling with economic doldrums.

"We believe both export and import growth have truly bottomed out from lows in mid-2012, but we remain cautious on export growth on uncertainties and weakness in the U.S., eurozone and Japan," said Lu and Zhi in a research note.

Fran Wang, AFP

Copyright Agence France-Presse, 2013