China’s export and import growth beat forecasts in the January-February period, providing encouragement for policymakers trying to support the economic recovery.
China’s improving export data followed South Korea and Germany, whose shipments beat expectations in the first two months of the year as Asian economies benefited from a surge in demand for semiconductors.
Exports from the world’s second-largest economy rose 7.1 percent in the two months from a year earlier, beating expectations in a Reuters poll for a 1.9 percent increase, customs data showed on Thursday. Imports, however, rose 3.5 percent, compared with expectations for a 1.5 percent increase.
“The better-than-forecast data reflect a recovery in global trade driven by the electronics sector, but also benefit from a low base effect as export growth in January-February was -6.8%,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
The customs bureau publishes trade data for January and February together to correct for distortions caused by the change in the timing of the Lunar New Year, which falls in February this year.
Chinese PM Li Qiang announced on Tuesday that the economic growth target for 2024 is 5 per cent, similar to last year, and pledged to transform the country’s development model based on exports of manufactured goods and excess industrial capacity.
Policymakers have struggled with low growth rates over the past year as consumers postponed spending, foreign companies divested, manufacturers struggled to find buyers and local governments grappled with huge debt burdens and the housing crisis.
A sustained recovery in exports is also important, although this key growth engine is expected to help support the economy.
“After accounting for changes in export prices and seasonality, we estimate that export volumes rose sharply in January and February, reaching a new high,” Huang Zichun, China economist at Capital Economics, said in a note.
“However, we are sceptical about the sustainability of this strength as exporters’ ability to cut prices to maintain market share is now more limited,” he added.
Exports to the US rose, while shipments to the EU fell
Market reaction to the trade data was largely muted. China’s blue-chip CSI300 index fell 0.32%, while Hong Kong’s Hang Seng index was down 0.47%.
China’s trade surplus widened to $125.16 billion, compared with $103.7 billion in the survey and $75.3 billion in December.
Commodities data released on the same day showed the Asian giant’s crude oil imports rose 5.1% year-on-year in the first two months of 2024, as refiners increased purchases to meet fuel sales during the Lunar New Year holiday, while copper imports rose 2.6%.
China’s total exports to the US returned to growth in January-February, rising 5% year-on-year, compared with a 6.9% fall in December. However, shipments to the EU fell by 1.3% over the same period.
Expectations of global monetary easing may also provide some relief to China’s hopes of boosting exports, but economic conditions in many major developed countries look bleak in the short term. Both Japan and the UK slipped into recession in the second half of last year, while the eurozone economy also stalled.
