China: Trade surplus returns in March

Exports in China rose 16.1% annually in March, contrasting the 1.3% decline in February. The print overshot the 4.3% rise that market analysts had expected and represented the fastest growth in over two years. While March’s strong rebound eased some concerns about the state of the Chinese economy following a weak kick-off to the year, analysts are wary about whether March’s strong figures will be sustainable.

Meanwhile, imports rose a healthy 20.2% annually in March, which came in below February’s astonishing expansion of 38.1%. The print overshot the 15.5% expansion that market analysts had expected. March’s print mostly reflected strong demand for raw materials and higher commodity prices.

As a result of the rebound in exports, the trade balance switched to a USD 23.9 billion surplus in March (March 2015: USD 25.3 billion) from a deficit of USD 9.1 billion in February. The 12-month moving sum of the trade surplus decreased from February’s USD 470 billion to USD 469 billion in March, which marked the lowest value since January 2015.

The much anticipated meeting between Donald Trump and Xi Jinping concluded on 8 April. Although they did not reach substantial agreements on trade policy, the meeting helped alleviate fears of an open trade war between the world’s two largest economies and both leaders agreed to a 100-day plan for trade talks.

FocusEconomics Consensus Forecast panelists project that merchandise exports will expand 2.2% in 2017, while imports will rise 2.9%, driving the trade balance to a surplus of USD 511 billion. For 2018, the panel expects exports to expand 0.7% and imports to increase 0.8%, while the trade surplus will drop to USD 512 billion.