China surprises with export-led March trade surplus

Tue Apr 10, 2012 7:49am EDT
 
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By Nick Edwards

BEIJING (Reuters) - China returned to an export-led trade surplus of $5.35 billion in March, heralding the prospect that a rebound in the global economy is lifting overseas orders just in time to compensate for a slowdown in domestic demand.

The surprise return to surplus from February's $31.5 billion deficit confounded expectations that trade would remain $1.3 billion in the red, with a solid 10.4 percent year-on-year bounce in sales to the United States helping exports grow faster than expected, customs data showed on Tuesday.

Imports undershot expectations, growing 5.3 percent on the year in March - consistent with other data suggesting soggy domestic demand in the first quarter of the year - but the trade numbers overall reinforced the view of analysts that China's trade-sensitive economy is set for a soft landing in 2012.

"The key point is that the export growth was up from 6.8 percent year-on-year in the January-February period," Dariusz Kowalczyk, an economist with Credit Agricole CIB in Hong Kong, told Reuters.

"Acceleration in exports may well be slower in volume terms, but the data still highlights the fact that China can continue to count on foreign demand to partly mitigate for weakening domestic demand," he said, adding that the data implied trade would be a net addition to economic growth in the first quarter.

Trade was a net drag on growth last year as the world's second biggest economy turned in its slowest rate of expansion since 2009, at 9.2 percent, with each quarter's growth in 2011 successively weaker than the previous three months.

That trend is likely to have extended to a fifth consecutive quarter in the first three months of 2012, with analysts polled by Reuters forecasting an 8.3 percent growth rate that sets the economy on course for its slowest year in a decade.

"The trade data looks okay... it shows the global economy is recovering, albeit slowly," said Zhou Hao, an economist with ANZ Bank in shanghai.   Continued...

 
A worker walks in a shipping container area at the Port of Shanghai April 10, 2012. REUTERS/Aly Song