There have been some worries over the prospects of China's trading activities after a very slow February. By the same token, the recently-released rosy statistics for March may help erase those doubts. While the numbers are impressive indeed, I do not think it is a complete surprise and therefore maintain the view that imports will grow much faster than exports, leading to a smaller trade surplus this year.
According to the State Administration of Customs (SAC), the country's exports grew 35.8 percent YoY (all figures on a year-on-year basis below unless otherwise specified) in March, rebounding from the 2.4 percent in February. Import growth also saw pick-up from 19.4 percent in February to 27.3 percent in March. Meanwhile, the trade account turned to a surplus of $140 million in March from a deficit of $7.3 billion in February.
The rebound of export growth in March, which was in line with expectation, was mainly caused by seasonal factors. Due to the Lunar New Year holidays, the growth of exports and imports usually sees marked fluctuations in the first quarter each year. Most rural migrant workers returned to factories from their hometowns much later this year than last year, which might have delayed the delivery of some product exports from February to March.
During March, exports to the European Union and the US registered increases of 6.6 percent and 16.7 percent, respectively, after declining 8 percent and 3.7 percent in February. Growth of exports to the Association of Southeast Asian Nations, Hong Kong and Korea saw significant acceleration, up from 0.5 percent, 37.2 percent and 7.6 percent in February to 82.2 percent, 100.4 percent and 77.7 percent, respectively, in March.
Meanwhile, exports to Japan rose 74 percent and those to Taiwan grew 100.8 percent in March, compared to the increases of 8.5 percent and 20.1 percent in February. Export growth to Australia and Russia also saw pick-up from 10.9 percent and 4.1 percent to 53.6 percent and 70.4 percent, respectively.
I expect the country's export growth to remain in fairly good shape on the back of continuous recovery of the global economy. Due to the base effect as well as continually rising input costs, however, export growth is likely to slow to below 25 percent or even 20 percent in the remaining months of this year.
Meanwhile, technological upgrades in domestic industries and the mounting inflationary pressure may give a boost to imports, which may maintain relatively higher growth than exports. I expect import growth to reach about 19 percent this year while trade surplus is expected to decline from $184.5 billion in the previous year to below $160 billion this year.
The author is Executive Director of BOCI Research Ltd (www.bocigroup.com). The opinions expressed here are entirely his own and do not represent BOCI or any other affiliated companies within the group. Nothing in this article constitutes an investment recommendation.