China’s export and import growth in the January-February period exceeded forecasts, suggesting that global trade is turning a corner in an encouraging sign for the world economy.
The data on the increase in exports from China joins those from South Korea and Germany, and Taiwan, which saw their exports reach the best expectations during the first two months of the year, with Asian economies benefiting from an increase in the search for semiconductors.
Exports from the world’s second-largest economy over the two months were 7.1% higher than a year earlier, customs data showed on Thursday, beating a Reuters poll that expected a 1.9% increase. Imports increased by 3.5%, compared to a forecast growth of 1.5%.
Chinese Premier Li Qiang announced on Tuesday an economic growth target for 2024 similar to last year’s of around 5% and promised to transform the country’s development model, which relies heavily on the export of finished products and excess industrial capacity.
Policymakers have been confronted with below-average growth over the past year in the midst of a housing crisis and as consumers delay spending, foreign companies divest, manufacturers fight for buyers and local governments face huge debt burdens.
China’s trade surplus grew to $125.16 billion, compared with a forecast of $103.7 billion in the survey and $75.3 billion in December.
Separate commodity data, also released on the day, showed the Asian giant’s crude oil imports rose 5.1% in the first two months of 2024 from a year earlier, as refiners increased purchases to meet sales of fuel during the Lunar New Year holiday.
Some reasons for optimism can be found in the fact that China’s overall exports to the United States returned to growth between January and February, increasing 5% year-on-year, compared to a 6.9% decline in December. But shipments to the EU still fell by 1.3% over the same period.
Expectations of global monetary easing may also offer some relief to China’s hopes of increasing exports, although economic conditions in many major developed countries look bleak in the near term.
Chinese policymakers have pledged to implement new measures to help bolster growth after measures implemented since June had only a modest effect, but analysts warn that Beijing’s fiscal capacity is now very limited and note that the speech of Li at the annual meeting of the National People’s Congress failed to inspire investor confidence.
Many economists say there is a risk that China will begin flirting with Japan-style stagnation later this decade unless authorities take steps to reorient the economy toward household consumption and market allocation of resources.
2024-03-07 11:17:42