• Alexander Liu-Middleton

President Trump optimistic about trade deal as China’s export numbers makes a comeback


Exports from China recovered after the Chinese New Year holiday amid an increase in trade-talks confidence, while a sustained slide in imports emphasised the instability of the national economy.


China’s exports increased 14.2% in March year on year while imports fell 7.6%. This left a trade excess of $32.65 billion, with the bilateral surplus with the US rising to $20.5 billion from $14.7 billion in February.


China's more optimistic trades overseas are a cautious sign of flexibility in the international economy amid further signs of trade pressures although the data would have been seriously prejudiced by seasonal and price issues. The continuous slump in imports does suggest a rough road ahead for the Chinese economy as it seeks to recover from a bruising few months.


Patrick Bennett, head of macro strategy for Asia at Canadian Imperial Bank of Commerce in Hong Kong stated "We still expect the first quarter marks the low point with more stimulus to filter through, global demand looks OK based on these numbers and central banks' less restrictive stance will help."


Statistics published soon after the trade numbers displayed credit growth also rose more than projected in March, an optimistic sign for the recovery. Cumulative financing was 2.86 trillion yuan (S$576.9 billion) last month, paralleled with about 700 billion yuan in February. The median estimate was 1.85 trillion yuan.

Katrina Ell, an economist with Moody's Analytics in Sydney reported “Stimulus efforts are bearing fruit; we expect to see a broader pick-up in activity taking place from the June quarter."


The revenue on China's 10-year government bonds extended its increase after the information was released, rising 6 points to 3.34%, the peak level this year. Futures bonds on the notes slid for the first time. The moves indicate that brokers are pricing in stronger risk appetite and less financial assistance.

The Chinese New Year this year fell in early February instead of the mid-February in 2018, which probably aided March year-on-year assessments. Big fluctuations in January to March trade information are typically due to the Chinese New Year holiday.

Banks including the Goldman Sachs Group Inc, Morgan Stanley and HSBC Holdings Plc are more and more assured that the world's second-biggest economy is finding its feet after an unsteady start to the year.


Corporate tax cuts, an improvement in manufacturing and expected improvement on a US trade agreement are among the influences buoying positivity.

The most recent round of trade discussions - which President Trump welcomed as a "big success" - further fueled positivity even as a final deal is not guaranteed yet. US and Chinese representatives are deliberating whether to add a concession on cloud computing to their trade agreement that would give international companies greater access to the US$12 billion dollar Chinese market.


The persistence of the nation's import slump is disturbing some analysts, who also say the power of exports is mainly the consequence of holiday biases.

Andrew Polk, co-founder of research firm Trivium China in Beijing stated “the import contraction is worse than we saw in the first two months of the year, reflecting the fact that domestic demand still faces stiff headwinds. This is further evidence that the narrative of a stabilising Chinese economy is far too premature. External demand and overall global trade are set to be sluggish throughout the rest of the year so even the good news from this release isn't all that good."


To receive a professional forecast on the Chinese economy or anything else China business related contact China Consulting Solutions by clicking on the ‘contact’ button above.

0 views

To contact the team to discuss how we can work for you, please email us at:

Clientservices@chinaconsulting.solutions

You can contact our Client Services Director,

David McMullan also via the email above or call:

+44 (0) 7564 374489

We always love talking about China and what we can do for our clients. Just let us know what you'd like to discuss and if you'd like us to call or email you and we will get right back to you.