China Exports Jump By Most Ever As Global Economy Redlines

“Excluding distortions from base effects, trade growth was still quite solid,” Nomura Holdings Inc. economists led by Ting Lu wrote in a note. While export growth will likely slow after March as base effects ease, fresh stimulus measures in developed nations, especially in the U.S., “may bolster external demand for Chinese products and partly offset the downward pressure,” they said.

On the import side, higher oil and metal prices drove major commodity imports higher in value terms in January and FebruaryThe decline in crude oil imports narrowed to -19.6% yoy from -43.2% yoy in December and iron ore imports rose 60.9% yoy, vs. +32.0% yoy in December. Imports of integrated circuits also accelerated to +34.3% yoy in January-February from +26.5% yoy. In volume terms, crude oil imports rose 4.1% yoy, vs. -15.4% yoy in December. Iron ore imports rose 2.8% yoy, reversing from -4.5% yoy in December.

A breakdown of commodity imports shows large increases in purchases of steel and natural gas in the two-month period and a plunge in coal.

In short, as Goldman summarizes, "Export growth accelerated in January-February as Covid-driven demand remained strong amid resurgence of infections globally, while total import value rose sharply on higher commodity prices, resulting in narrower monthly trade surplus."

The data comes two days after the closely watched National People’s Congress kicked off in Beijing, with the government setting out its economic agenda for coming years. Authorities are targeting growth of more than 6% this year (roughly in line with where the US will be), a disappointing and "conservative" goal compared with the 8.4% expansion that economists predict. The government also signaled more restrained monetary and fiscal policy after last year’s pandemic stimulus.

“We expect Beijing to carry out its policy normalization in coming months, although a sharp shift in policies appears unlikely,” Nomura’s economists said.

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