China Trade Surplus Surprises

Imports fell while exports rose, helped by U.S.

China reported an unexpected trade surplus of $5.35 billion in March, after experts believed that negative numbers from February would continue. The U.S. was a big contributor to that return to the positive, with a 10.4% increase year-over-year in purchases that helped return trade to the plus side of the ledger.

Reuters reported that customs data released Tuesday showed that imports were below expectations, growing at 5.3% year on year, but overseas orders boosted China's economy despite weak domestic demand.

"The key point is that the export growth was up from 6.8% year-on-year in the January-February period," Dariusz Kowalczyk, an economist with Credit Agricole CIB in Hong Kong, said in the Reuters report. "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 added that the data implied trade would be a net addition to economic growth in the first quarter.

With each quarter of economic growth for China slower than the previous quarter in 2011, China recorded its slowest rate of expansion since 2009, coming in at 9.2%. Analysts expected that trend to continue for a fifth consecutive quarter for the first quarter of 2012, predicting 8.3% growth in a poll. But apparently the numbers could come in higher, since March data is the first not to be distorted by Lunar New Year peculiarities.

"The trade data looks okay... it shows the global economy is recovering, albeit slowly," Zhou Hao, an economist with ANZ Bank in Shanghai, said in the report. "Given that China had a trade surplus in the first quarter versus a deficit in the Q1 last year, it indicates a positive contribution to GDP growth. We reckon Q1 GDP growth should be 8.6%. I think the market is a bit too pessimistic about China's economy."

Reprints Discuss this story
This is where the comments go.