The export engine at the heart of the Chinese economy has roared back to life, defying expectations and bolstering hopes that Beijing will achieve its growth target this year.
Despite weak global growth, exports from the world’s second-largest economy surged nearly 15 percent in March, fueled by sales of electric vehicles and their components as well as a swell in trade with Russia.
The expansion, which surprised economists, came as Beijing hopes to achieve a gross domestic product growth target of 5 percent this year. The target is its lowest for more than three decades, after its economy expanded just 3 percent last year under President Xi Jinping’s zero-Covid controls.
Customs data released on Thursday showed dollar-denominated exports expanded 14.8 per cent compared with the same period a year earlier, after falling 6.8 per cent in January and February. Analysts polled by Reuters had forecast a contraction of 7 per cent.
The trade data represented the first export expansion since September, as demand slowed, weighing on China’s economy and threatening a pillar of growth. Manufacturing output has struggled to emerge from the shadow of the pandemic, while consumption growth has been uneven.
A sharp increase in shipments to Russia as well as south-east Asian countries, particularly Vietnam, Singapore and Malaysia, contributed the most to the gains.
Hao Zhou, an analyst with Chinese securities group Guotai Junan International, said the unexpected jump in exports last month suggested an “upside risk” to China’s first-quarter GDP figures, due next week.
But he said the “most important” gains came from a surge in “so-called new exports” including electric vehicles, lithium and solar batteries. Trade growth in steel and clothing was also strong, while exports of personal computers, mobile phones and integrated circuits declined.
Shipments to southeast Asia were resilient, and those to the US and Europe, hit by trade tensions, narrowed their decline.
The customs office said that while trade data at the start of the year “showed relatively strong resilience”, geopolitical risks, protectionism and inflation remained a concern.
Imports also strongly beat forecasts, declining just 1.4 per cent year on year last month, compared with expectations of a 5 per cent contraction following a 10.2 per cent fall at the beginning of the year.
Export strength had previously provided an economic lifeline during the coronavirus pandemic when Chinese policymakers were battling a rolling liquidity crisis in the property sector and weak domestic consumption. But exports weakened last year as global inflation rose and outbreaks of the virus spread across the country.
Last week, China’s premier Li Qiang chaired a meeting of the state council, the country’s cabinet, focused on promoting stability in foreign trade. Li called on officials to “try every method” to stabilize exports to developed countries, according to state media.
Since taking office as China’s number-two figure last month, Li has sought to project a more conciliatory tone to international business to encourage the return of trade and investment following the loosening of the pandemic regime, even as the US has moved to restrict China’s access to components for advanced technology such as semiconductors.
Iris Pang, China economist with ING, predicted that Beijing would also roll out new consumer-focused stimulus measures to spur demand and support job growth.
Analysts at economic research group Capital Economics wrote that a weaker outlook for global demand meant any export rebound was likely to be shortlived, given a subdued outlook for foreign demand, recent turmoil in the banking sector and the delayed impact of interest rate increases.
“We expect most developed economies to slip into recession this year and think that the downturn in Chinese exports still has some way to run before it reaches a bottom later this year,” they wrote.
Analysts from CICC, a state-run investment bank, also cautioned that despite rapid growth in shipments of electric vehicles and their components, China was still likely to face a 3 per cent year-on-year decline in exports.
“Overseas demand remains in a downward trend, while financial risks also bring uncertainties,” he said.