Economist at UOB Group Ho Woei Chen reviews the latest trade balance figures in China.

Key Takeaways

“Exports unexpectedly surged in Mar while imports were less robust but still came in above consensus’ expectation. China’s shipments improved amid the normalisation of domestic production and stronger demand from the Asian and European markets.”

“In volume terms, China’s imports of commodities such as crude and refined petroleum, LPG, coal and iron ore were strong compared to the year-ago period which is an indication of inventory rebuilding, pick-up in construction activity and concerns over energy shortages particularly as domestic demand rebounds. Commodity imports are expected to continue benefiting from domestic demand recovery and stronger construction activities ahead.”

“In 1Q23, exports rose 0.5% y/y while imports contracted by 7.1% y/y. Despite the strong export data, we are less convinced of a sustained improvement in China’s export outlook as global demand has remained sluggish with an upturn only expected in the later part of this year.”

“Overall, we maintain our forecast for China’s export to register a contraction of 3.0% this year while imports may see a small gain of around 2.0% in 2023 as domestic demand recovers.”