China’s Jan-Feb trade beats forecasts, signals global trade rebound
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Exports from China, the world’s second-biggest economy, in January to February were 7.1 per cent higher than a year before, customs data showed on March 7.
PHOTO: AFP
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BEIJING – China’s export and import growth in the January to February period beat forecasts, suggesting global trade is turning a corner in an encouraging signal for policymakers as they try to shore up a stuttering economic recovery.
China’s improved export data joins that of South Korea, Germany and Taiwan, which all saw their shipments top expectations over the first two months of 2024, with the Asian economies benefiting from a surge in demand for semiconductors.
Exports from the world’s second-biggest economy in the two months were 7.1 per cent higher than a year before, Customs data showed on March 7, beating a Reuters poll that expected an increase of 1.9 per cent.
Imports were up 3.5 per cent compared with a poll forecast of 1.5 per cent growth.
“The better-than-forecast data echoes a recovery in global trade driven by the electronics sector, but also benefits from a low base effect as export growth in January to February 2023 was minus 6.8 per cent,” said Mr Xu Tianchen, senior economist at the Economist Intelligence Unit.
China’s Customs agency publishes combined January and February trade data to smooth out distortions caused by the shifting timing of Chinese New Year, which took place in February in 2024.
Chinese Premier Li Qiang on March 5 announced an ambitious 2024 economic growth target of around 5 per cent and promised to transform the country’s development model, which is heavily reliant on exporting finished goods and industrial overcapacity.
Beijing has been grappling with sub-par growth over the past year amid a property crisis and as consumers hold off spending, foreign firms divest, manufacturers struggle for buyers, and local governments contend with huge debt burdens.
Policymakers will need to see a sustained rebound in exports to be convinced that the crucial engine of growth will help bolster the economy.
In contrast to the trade data, for instance, manufacturing activity in China in February shrank for a fifth month, according to the government’s purchasing managers’ index released a week ago, while new export orders decreased for an 11th consecutive month.
“After accounting for changes in export prices and for seasonality, we estimate that export volumes rose significantly in January and February, hitting a fresh high,” Dr Huang Zichun, China economist at Capital Economics, said in a note.
“We doubt the sustainability of this strength, however, since exporters now have more limited scope to reduce prices to secure market share,” she added.
Some cause for optimism can be found in the fact that China’s exports to the United States in January to February returned to growth, rising 5 per cent from a year earlier compared with a decline of 6.9 per cent in December.
But outbound shipments to the European Union shrank 1.3 per cent in the same period.
Policymakers have pledged to roll out further measures to help shore up growth after steps implemented since June had only a modest effect, but analysts caution that Beijing’s fiscal capacity is now very limited and note that Mr Li’s address to the annual meeting of the National People’s Congress also failed to inspire investor confidence.
Many analysts worry that China may begin flirting with Japan-style stagnation later this decade unless policymakers take steps to reorient the economy towards household consumption and market allocation of resources.
China’s trade surplus grew to US$125.16 billion (S$167.3 billion), compared with a forecast of US$103.7 billion in the poll and US$75.3 billion in December. REUTERS
