China surprises with export-led trade surplus

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. 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.
Exports to the United States - the single country with the biggest trading relationship with China - were a particular high point. But shipments the 27 members of the European Union - the biggest overall market for Chinese goods - were down 3.1 percent from March last year.
Overall, import and export growth were both down sharply from February's Lunar New Year-distorted surge, though within sight of the government's target of 10 percent expansion for 2012. Import growth of 5.3 percent in March compared with economists' expectations of 9.0 percent and February's 39.6 percent growth, while export growth of 8.9 percent compared with a consensus call for 7.2 percent, still a marked easing from February's 18.4 percent rate.
China's trade surplus narrowed for a third straight year to $155 billion in 2011, from $183 billion in 2010, $196 billion in 2009 and $296 billion in 2008. The trade surplus as a share of gross domestic product (GDP) dropped to about 2 percent in 2011 from 3.1 percent in 2010.