Chinese customs authorities disclosed trade data for December and the whole of 2013 on Friday, which showed notable exports growth deceleration last month. Analysts said December's exports growth deceleration was mainly due to base-effect distortion. They remained cautiously optimistic over the country's external outlook and exports in 2014, given the coexistence of lingering base-effect distortion and ongoing recovery of the U.S. and European Union (EU) economies. LARGEST TRADING NATION Zheng Yuesheng, General Administration of Customs spokesman, said China's total exports and imports surpassed 4 trillion U.S. dollars for the first time to reach 4.16 trillion U.S. dollars in 2013, up 7.6 percent year on year. With it, China has overtaken the United States to become the world's largest trading nation, according to Liu Ligang, chief China economist at ANZ Banking Group. The growth rate, however, is slightly lower than the government's full-year target of 8 percent, published in the beginning of last year. In 2013, exports rose 7.9 percent year on year to 2.21 trillion U.S. dollars, while imports increased 7.3 percent to 1.95 trillion U.S. dollars. The foreign trade surplus widened to 259.75 billion U.S. dollars in 2013, an increase of 12.8 percent from a year earlier. According to Zheng, trade with the EU, China's biggest trade partner, edged up 2.1 percent year on year to 559.1 billion U.S. dollars in 2013. China exported 339 billion U.S. dollars' worth of goods to the EU. It imported 220.1 billion U.S. dollars' worth of goods from the union. Trade with the U.S., China's second-bigget trade partner, rose 7.5 percent year on year to 521 billion U.S. dollars. China's exports to the U.S. amounted to 368.4 billion U.S. dollars, while imports from the country stood at 152.6 billion U.S. dollars. China's trade with the Association of Southeast Asian Nations, its third-largest trading partner, rose 10.9 percent year on year to 443.6 billion U.S. dollars. Its trade with Japan meanwhile contracted 5.1 percent year on year, to 312.55 billion U.S. dollars. DISTORTION WEIGHS ON DECEMBER EXPORTS In December, China's foreign trade value hit a new high of 389.8 billion U.S. dollars, an increase of 6.2 percent from a year earlier, customs data showed. December's exports amounted to 207.7 billion U.S. dollars, an increase of 4.3 percent, significantly lower than 12.7 percent in November and also lower than 5.6 percent in October. Import growth rose to 8.3 percent year on year in December from 5.3 percent in November. December's exports growth slowdown was mainly due to base-effect distortion, said HSBC's China economists Ma Xiaoping and Qu Hongbin in a research note. In the first quarter of 2013, over-invoicing trade activities through Hong Kong had allowed China's exports growth to balloon to 20 percent year on year, they said. Lu Ting, chief China economist with the Bank of America Merrill Lynch, highlighted the role of fake reporting of exports, as some people took advantage of arbitrage opportunities in early 2013 over different exchange rates between the U.S. dollar and the onshore and offshore Renminbi. Liu Ligang agreed, saying that the market generally believes there was fake reporting of exports in late 2012 and early 2013, which led to afalsely high reading of China's exports in December 2012. Aside from the high base-effect, December's exports deceleration was also led by a slowdown in shipments to the U.S., EU and Japan, Ma and Qu said. December's import growth came in at a five-month high of 8.3 percent year on year from 5.4 percent in November, suggesting the recovery of China's domestic demand conditions remained steady, they said. CAUTIOUSLY OPTIMISTIC Economists said they are cautiously optimistic for China's external outlook this year. Recovery in the U.S. and the EU could aid China's export growth. Shipments to emerging markets, which now represent 55 percent of China's exports, are also likely to accelerate. But external demand, as indicated by the sub-index of new export orders within the HSBC and official manufacturing PMIs, contracted in December, Ma and Qu said. Meanwhile, the high base-effect distortion could continue to drag down year-on-year export growth over the coming months, they said. Lu Ting agreed. "We should be prepared for a period of low exports growth due largely to the faked exports data between December 2012 and April 2013," Lu said. He predicted stronger tailwinds -- thanks to faster U.S. and European growth -- than headwinds, owing to weak emerging markets and the strong Renminbi, for China's exports. Lu forecast annual export growth could rise to 9.6 percent in 2014, contributing about 40 basic points to GDP growth. Headline import growth could increase 7.9 percent in 2014 on robust domestic demand including some restocking of raw materials. Headline trade surplus could rise slightly to 280 billion U.S. dollars in 2014, he also forecast. "Today's trade data make us quite comfortable with our neither bullish nor bearish 2014 GDP and trade forecasts," said Lu, who projected 7.6-percent growth for the world's second largest economy. Exports, along with retail sales and investment, have been one of the three main drivers for China's rapid economic growth. External demand supports about 12 percent of the country's GDP and absorbs some 35 percent of industrial output.