China trade beats expectations in March as economy picks up
Imports and exports continue to drop but at a slower-than-expected rate; rebound seen as short-lived
Beijing
CHINA'S imports and exports continued to drop in March but at a slower-than-expected rate, as the country's millions of factories gradually returned to work after a prolonged break due to the coronavirus pandemic.
However, analysts warn the rebound will be short-lived as the rest of the world grapples with the pandemic.
China's exports fell 6.6 per cent in March from a year ago, while imports slipped 0.9 per cent in the same month, data from the General Administration of Customs showed on Tuesday. That compares with a sharp drop of 17.2 per cent for exports and 4 per cent for imports for the two first months of 2020.
For March, the trade surplus was US$19.9 billion, more than the US$18.55 billion that economists polled by Reuters had expected.
The figures are in line with the PMI which unexpectedly rebounded last month as efforts by local authorities to get China's millions of factories to return to work after a two-month lockdown are bearing fruit.
Official figures show most Chinese exporters had resumed at least 70 per cent of their production capacity by the end of March.
However, analysts worry the worst may to come for Chinese exporters, which make up 18 per cent of GDP, as the rest of the world puts their economies on hold, disrupting global supply chains, provoking shortages of certain raw materials and shutting whole production lines.
"Shrinking international demand will hit China's exports, even as recovering domestic demand lends support to China's economy," said Li Kuiwen, spokesperson for the Ministry of Commerce. "With Covid-19 spreading worldwide, the global economy faces mounting downward pressure. Uncertainties are on the rise. China's foreign trade is encountering major difficulties."
The World Trade Organization (WTO) warned last week that 2020 could see the worst collapse in international trade since the Great Depression. The WTO said the volume of international goods is expected to drop between 13 per cent and 32 per cent this year, worse than the 12 per cent fall registered during the financial crisis in 2009.
Last month, Asean became China's biggest trading partner, surpassing the European Union that is now struggling to contain the Covid-19 virus, according to official custom figures.
"Export orders have been stopped by US and European importers after early-March as the number of lockdowns increased. This will affect April's exports," said Iris Pang, an economist at ING NV in Hong Kong. "Unless the world relaxes measures of social distancing after (lifting) lockdowns altogether, trade flows will be disrupted, and exporters will face dismal demand from the whole world."
In March, China's iron ore imports dipped with steel mills having to deal with record-high inventories. Last month, prices at factory gates continued to contract and will remain in deflation for several months, according to analysts.
China's crude oil imports in March rose 4.5 per cent from a year earlier, as refiners stocked up on cheaper cargo.
"Trade growth will get much worse in the second quarter. We expect China's export growth to plummet to around -30 per cent in the second quarter. In addition, the threat of a decoupling between nations amid the pandemic could further weigh on China's trade prospects," said analysts at Nomura.
China has been actively supporting its economy to avoid a recession by rolling out a mix of fiscal and monetary polices. Last week, the State Council announced a series of measures to support trade, including setting up 46 new integrated pilot zones for cross-border e-commerce as well as proceeding with an online session of the Canton fair, scheduled in June.
The government has also said it will press on with plans to hold the International Import Expo in November.
