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China’s trade strengthens better than expected in March

CHINA’S foreign trade in March strengthened beyond market expectations, reflecting improving external and domestic demand.

Exports in yuan-denominated terms rose 22.3 percent year on year in March to 1.24 trillion yuan (US$180.6 billion), while imports increased 26.3 percent to 1.07 trillion yuan, according to the General Administration of Customs.

That compared with 11 percent increase in export and 34.2 percent growth in import in the first two months this year.

In US-dollar terms, exports jumped 16.4 percent and imports rose 20.3 percent, higher than market expectations for 3.2 percent and 18 percent respectively according to a Reuters poll.

Analysts said the better-than-expected trade data suggested stronger global economy and continued warming up of domestic demand.

“March export growth accelerated, import growth moderated less than expected,” Morgan Stanley said in a note today. “The better export readings are in line with Morgan Stanley Global Trade Leading Indicator which confirmed improving external demand. Meanwhile, imports growth held up better than expected, as the drag from a high base was partly offset by higher import prices, stronger processing trade and still resilient domestic demand.”

The strong exports growth provided room for a faster pace of counter-cyclical monetary tightening as the central bank may continue hikes in interbank rates and tighter regulations on non-standard credit to slow the pace of broad credit growth, the note said.

Huang Songping, spokesman with the customs, said three consecutive months’ growth in foreign trade indicate mounting positive changes in the economy, but pressure remain for the year.

The global economic recovery is uncertain and the prices of commodities remain volatile.

A high base in the second quarter last year may result in slower headline growth of trade in the next three months, Huang said.


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