CHINA’S exports grew much faster than expected in the first two months of 2024 in an early, encouraging sign for demand as the world’s second-largest economy tries to find its footing.

Overseas shipments in US dollar terms rose 7.1 per cent in the January to February period from a year earlier, well above the 1.9 per cent forecast by economists in a Bloomberg survey, official data showed on Thursday (Mar 7).

The uptick was also much better than December’s gain of 2.3 per cent. Imports grew 3.5 per cent. The trade surplus was US$125 billion, a record.

“We are witnessing an uptick in global demand, led by stronger manufacturing activity in the US,” said Carlos Casanova, a senior Asia economist at Union Bancaire Privee in Hong Kong. “While stronger demand will not offset domestic pressures around a housing sector slowdown, it will not be a drag in 2024” on China.

China’s trade has come under pressure within the last year as weak demand from many of its major trading partners and geopolitical tensions weigh on the country’s ability to mount a sustained turnaround. Trade data for the first two months of the year is typically combined to avoid distortions from the annual Chinese New Year holiday.

China’s benchmark CSI 300 Index erased a gain of as much as 0.5 per cent following the data to end the morning session on Thursday down 0.3 per cent.

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Government bond yields gained for the first time this week. Yields on the 10-year note rose 3 basis points to 2.30 per cent after the data. Reaction was muted in the currency market. Onshore and offshore yuan traded steady.

At a Wednesday briefing in Beijing on the sidelines of the National People’s Congress, Commerce Minister Wang Wentao told reporters that China still sees “a very grim outlook for trade this year” because of declining demand overseas. He added, though, that the nation’s export products are “moving up the value chain”.

There are longer-term concerns for China, including “the diversification of the global supply chains amid heightened geopolitical tensions, which may weigh on China’s export market share”, said Michelle Lam, a Greater China economist at Societe Generale.

Exports jumped about 10 per cent year-on-year in yuan terms in the first two months of 2024. Those figures were revealed on Wednesday by Wang, though he did not specify in which currency. It marked another example of officials front-running data releases, after Premier Li Qiang earlier this year announced 2023’s full-year growth figures in Switzerland, a day before official publication.

Beijing is targeting economic growth of around 5 per cent this year – an ambitious goal that so far has been met with scepticism as economists suggest more policy support is needed to hit that goal, given the property crisis and deflation. People’s Bank of China governor Pan Gongsheng on Wednesday hinted at a potential liquidity boost, saying there is still room to cut the reserve requirement ratio for banks.

Persistent pressures from deflation have made Chinese exports cheaper for foreign consumers – but that is also dragged down their value. An index of export prices in October hit the lowest in data going back to 2006. Last year, the exports posted their first full-year decline since 2016. BLOOMBERG