China's exports rise unexpectedly, but economists warn of weakness ahead
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[April 13, 2023] By
Joe Cash and Ellen Zhang
BEIJING (Reuters) - China's exports unexpectedly surged in March, with
officials flagging rising demand for electric vehicles, but analysts
cautioned the improvement partly reflects suppliers catching up with
unfulfilled orders after last year's COVID-19 disruptions.
Exports in March shot up 14.8% from a year ago, snapping five straight
months of declines and stunning economists who predicted a 7.0% fall in
a Reuters poll.
But analysts say the jump was more likely related to exporters rushing
to fulfil a backlog of orders that had been disrupted by the pandemic in
past months, and warned the global demand outlook remained subdued.
"The wave of COVID outbreaks in December and January likely depleted
factories' inventories. Now that factories are running at full capacity,
they caught up the cumulated orders from the past," said Zhiwei Zhang,
chief economist at Pinpoint Asset Management."
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"The strong export growth is unlikely to sustain given the weak global
macro outlook," he added.
Meanwhile, imports fell less than expected, with economists pointing to
an acceleration in the purchase of agricultural products, especially
soybeans, as providing some support.
Imports dropped just 1.4%, smaller than the 5.0% decline forecast and a
10.2% contraction in the previous two months. Increases in crude oil,
iron ore and soybeans imports in the month were offset by a decline in
copper imports.
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Financial markets took little cheer from the upbeat export data as
investors remained wary about the outlook, although the Australian
dollar, seen as a proxy for Chinese demand for commodities, rose
slightly.
Lv Daliang, spokesperson of the General Administration of Customs,
attributed the upside surprise to strength in demand for electric
vehicles, solar products and lithium batteries.
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An aerial view shows containers and
cargo vessels at the Qingdao port in Shandong province, China May 9,
2022. Picture taken with a drone. China Daily via REUTERS
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However, he warned conditions could worsen going forward.
"The external environment is still severe and complicated at
present," Lv told reporters in Beijing on Thursday. "Sluggish
external demand and geopolitical factors will bring greater
challenges to China's trade development," he added.
China's strong performance contrasts with that of other Asian
exporters, such as South Korea and Vietnam, which have both seen
exports decline in the first few months of 2023, contributing to
doubts that it can be sustained.
"We aren’t convinced that this rebound will be sustained given the
still gloomy outlook for foreign demand," Capital Economics analysts
said in a note.
"We expect most developed economies to slip into recession this year
and think that the downturn in Chinese exports still has some way to
run before it reaches a bottom later this year."
Factory surveys showed export orders falling in March, a contrast to
more upbeat readings for the services sector, which has benefited
from China's reopening.
China's newly appointed premier Li Qiang told a cabinet meeting last
week that officials should "try every method" to grow trade with
developed economies and push companies to further explore emerging
market economies, such as those of Southeast Asia.
Beijing has set a growth target of around 5% for gross domestic
product (GDP) this year, after severe pandemic controls last year
knocked the economy to one of its slowest rates in decades. GDP rose
only 3% last year.
(Reporting by Joe Cash and Ellen Zhang; Editing by Clarence
Fernandez and Sam Holmes)
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