Hopes grow for a Chinese soft landing as exports surge again

City A.M. Reporter
CHINA returned to an export-led trade surplus in March, official figures showed yesterday, 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 a $5.35bn (£3.38bn) surplus from February’s $31.5bn deficit confounded expectations that trade would remain $1.3bn in the red, with a solid 10.4 per cent year-on-year bounce in sales to the US helping exports grow faster than expected, customs data revealed.

Imports undershot expectations, growing 5.3 per cent 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 export growth was up from 6.8 per cent year-on-year in the January-February period,” said economist Dariusz Kowalczyk from Credit Agricole.

“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 economy expanded at its slowest rate since 2009, at 9.2 per cent, with growth slowing steadily towards the end of the year.