©Reuters. File photo: An aerial view shows cars for export at a port in Yantai, Shandong province, China, May 3, 2023. China Daily via REUTERS/file photo
By Joe Cash
BEIJING (Reuters) – Growth in China’s exports and imports in January-February beat forecasts, suggesting global trade is turning around, an encouraging sign for policymakers as they try to shore up a stuttering economic recovery.
China’s improving export data joins those of South Korea, Germany and Taiwan, which recorded higher-than-expected shipments in the first two months of the year, with Asian economies benefiting from a surge in demand for semiconductors.
Exports from the world’s second-largest economy in the two months were 7.1% higher than a year earlier, customs data showed on Thursday, beating a Reuters poll that had forecast a 1.9% rise. Imports rose 3.5%, compared to a growth forecast of 1.5%.
“The better-than-expected data reflects a recovery in global trade led by the electronics sector, but also benefits from a low base effect, as export growth in January-February 2023 was -6.8%,” he said. said Xu Tianchen, senior economist at the Economist Intelligence Unit.
The customs agency releases combined trade data for January and February to smooth out distortions caused by the shift in the timing of the Lunar New Year, which fell in February this year.
Chinese Premier Li Qiang on Tuesday announced an economic growth target for 2024 similar to last year’s, of around 5%, and promised to transform the country’s development model, which depends heavily on the export of products finished products and industrial overcapacity.
Policymakers have been grappling with below-average growth over the past year amid a housing crisis and as consumers rein in spending, foreign companies divest, manufacturers struggle for buyers and local governments face huge burdens debtors.
Policymakers will need to see a sustained recovery in exports to be convinced that the crucial engine of growth will help support the economy.
In contrast to the trade data, for example, manufacturing activity in China in February contracted for a fifth month, according to the government’s purchasing managers’ index released a week ago, while new export orders fell for the eleventh consecutive month.
“After taking into account changes in export prices and seasonality, we estimate that export volumes increased significantly in January and February, reaching a new high,” Zichun Huang, China economist at Capital, said in a note Economics.
“However, we doubt the sustainability of this strength, as exporters now have more limited scope to reduce prices to secure market share,” he added.
Some reason for optimism can be found in the fact that Chinese exports to the United States in January-February returned to growth, rising 5% from a year earlier compared to a 6.9% decline in December. But outbound shipments to the EU still fell by 1.3% over the same period.
Policymakers have pledged to enact further measures to support growth after measures taken since June had only a modest effect, but analysts warn that Beijing’s fiscal capacity is now very limited and note that even Li all’s speech he annual meeting of the National People’s Congress has failed. inspire investor confidence.
Many analysts worry that China could start flirting with Japanese-style stagnation at the end of this decade unless policymakers take steps to reorient the economy toward household consumption and market resource allocation.
China’s trade surplus grew to $125.16 billion, compared with the survey’s forecast of $103.7 billion and December’s $75.3 billion.