China Exports Rebounds In March

Cheryl Sanders
April 14, 2019

"Exports have yet to completely recuperate from a sharp downturn late last season", said Julians Evans-Pritchard of Capital Economics in a report. Meanwhile, global growth has been downgraded by the International Monetary Fund and the World Trade Organization says the conflict over tariffs will hit global trade growth this year.

Exports to the United States in January and February fell 14.1% from a year earlier. Dow Jones said the surplus was only expected to have come in at $6 billion.

China's manufacturing sector reflected growth for last month and moved to expansionary mode, with Caixin/Markit Manufacturing purchasing managers' index coming in at an eight-month high of 50.8 points, while the official PMI number was at 50.5 points.

China factory surveys for March had provided some glimmers of hope that demand was improving at home and overseas, suggesting government stimulus measures may be starting to take hold.

Meanwhile, hopes are high that the USA and China could be close to a trade deal, with Treasury Secretary Steven Mnuchin telling CNBC that Washington and Beijing have "pretty much agreed on an enforcement mechanism" for when a deal is struck.

Analysts said the trade standoff between the USA and China was a likely factor behind the slowdown.

But economists warn that even if a deal is reached, and both sides rescind tit-for-tat tariffs, Chinese exporters will still have to contend with weakening demand globally.

Earlier this week, the International Monetary Fund improved the outlook for Chinese growth this year to 6.3%, as the conflict between the USA and China on their trade deal did not worsen as expected from its earlier forecast.

The trade dispute has prompted some United States companies to shift purchases of tariff-targeted products like furniture and refrigerators to countries such as Taiwan, Vietnam, South Korea and Mexico, according to a report by S&P Global Market Intelligence's trade data firm Panjiva.

This accounted for a large chunk of China's total trade surplus, which grew to US$32.64 billion in March, up from $4.08 billion over the first two months of the year.

ING economist Iris Pang said: "Exports jumped on seasonal factors while imports continued to shrink, with less demand for U.S. goods compared to a year ago".

Slackening demand has sent corporate profits into a tailspin, which could curb the fresh investment that Beijing is counting on to fuel an economic revival. State-controlled banks are also being urged to keep lending to companies that are struggling.

China's economic growth is expected to cool to about 6.3 percent in the first quarter of the year and might not bottom out until later in the year, a Reuters poll showed. Last year, the country expanded by 6.6%, its slowest growth since 1990.

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