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China Trade Balance March 2022

China: Merchandise exports grow at a quicker pace in March, but outlook is gloomy

Merchandise exports jumped 14.7% in annual terms in March (February: +6.3% year-on-year), slightly above market expectations. Meanwhile, merchandise imports were broadly stable, falling just 0.1% in annual terms in March (February: +10.5% yoy), marking the weakest result since August 2020. The stagnation in imports was likely the result of Covid-19 restrictions hitting home.

As a result, the merchandise trade balance improved from the previous month, recording a USD 47.4 billion surplus in March (February 2022: USD 30.5 billion surplus; March 2021: USD 11.8 billion surplus). Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 731.3 billion surplus in March, compared to the USD 695.5 billion surplus in February.

Looking forward, exports are set to be dampened in the near term by domestic Covid-19 disruptions and a less favorable external environment. While the value of imports should be buoyed by higher prices, underlying demand will likely be fairly subdued on soft consumption.

On the outlook, analysts at Nomura said:

“There have […] been severe disruptions from the delivery of exports from factories to ports. Some of the world’s largest factories and assemblers, such as Tesla and Pegatron, suspended their operations due to a lack of workers and parts. As there are no signs yet of any easing of the lockdowns, we expect exports to be hit further in coming weeks.”

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