People & Money

Chinese Exports Grow by 14.8% in March, Gives Signs of Economic Recovery

In spite of weak global economic growth, China is experiencing a remarkable upswing, as the country had an almost 15% export growth in March. And this was primarily driven by the trade of electric vehicles and their parts, along with a surge in trade with Russia.

Financial Times noted that the export engine that drives the Chinese economy has come back to life and is strengthening the prospects of Beijing meeting its growth target for the year, which is a projected GDP growth of 5% this year.

Also Read: China’s Economy Grew by 8.1% in 2021: Implications for Nigeria

China’s economy experienced a growth rate of approximately 3% in 2022, marking the lowest expansion in over thirty years. This was attributed to a series of lockdowns implemented in adherence to Xi Jinping’s zero-COVID policy. In response, Beijing set a GDP growth target of 5% in 2023, the lowest for more than 30 years.

According to customs data unveiled on Thursday, exports denominated in dollars increased by 14.8% compared to the corresponding period in the previous year. This rebound followed a decline of 6.8% in January and February. A survey conducted by Reuters analysts had predicted a decrease of 7%, instead of the actual outcome.

The latest trade statistics indicate the initial growth in exports since September. However, this expansion comes amid the backdrop of subdued demand, which has put pressure on China’s economy and jeopardized a crucial source of growth. Production recovery has been hindered by the pandemic, while consumption growth has been uneven.

According to Financial Times, the significant rise in deliveries to Russia and Southeast Asian nations, specifically Vietnam, Singapore, and Malaysia, was the primary factor driving the increase in exports.

Hao Zhou, an expert at Guotai Junan International, a Chinese securities firm, noted that the unforeseen surge in exports in the previous month indicated a potential “upside risk” to China’s first-quarter GDP data, scheduled to be released the following week. However, he emphasized that the most notable gains were observed in the significant increase in “new exports,” which include electric vehicles, lithium, and solar batteries. The export growth of steel and clothing was robust, but there was a decline in the export of personal computers, mobile phones, and integrated circuits.

Exports to Southeast Asia remained sturdy, and those to the United States and Europe, which were affected by trade tensions, saw a reduction in their decline. According to the customs office, while the trade statistics at the beginning of the year demonstrated relatively robust resilience, concerns regarding geopolitical risks, protectionism, and inflation persist.

Also Read: Chinese Loans: Let’s Just Hand Over Our Railways to Beijing

Last month, imports outperformed forecasts with a decline of only 1.4% year on year, surpassing the anticipated 5% contraction after a drop of 10.2% at the start of the year.

During the coronavirus pandemic, the resilience of exports had previously offered economic support as policymakers in China confronted a continuous liquidity crisis in the real estate industry and sluggish domestic consumption. However, last year, exports began to falter as global inflation increased and COVID-19 outbreaks swept across China.

It was noted last week that China’s premier, Li Qiang, presided over a meeting of the State Council, the country’s cabinet. The meeting was concentrated on advancing stability in foreign trade. According to state media, Li urged officials to use every available means to stabilize exports to developed nations.

According to Financial Times, since assuming the position of China’s second-ranking official last month, Li has attempted to present a more conciliatory attitude towards international commerce, in order to attract trade and investment after the relaxation of pandemic restrictions, despite the US’s attempts to limit China’s access to crucial components for advanced technology, such as semiconductors.

According to Iris Pang, an economist with ING, Beijing is expected to introduce fresh stimulus measures aimed at consumers to boost demand and facilitate job creation.

Capital Economics, an economics research group, projected that due to the weaker outlook for global demand, any rebound in exports was likely to be short-lived, “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.”

Also Read: Chinese private security firms are growing their presence in Africa: why it matters

Also, analysts from CICC, a state-run investment bank, warned that although there was a rapid growth in the shipment of electric vehicles and their components, China would probably experience a 3% year-on-year drop in exports.

David Olujinmi

David Olujinmi studies Engineering but his true passion is research and analysis. He writes about finance, particularly the capital market, investment banking, and asset management. More »

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