China released trade figures for March following its predecessors reflecting increasing inflationary pressures and worsening export performance. Export performance accelerated, pointing to a 14.7% increase in dollar terms, while March imports contracted by 0.1% due to stagnant domestic demand. Expectations were for exports to increase by 12.8% and imports to increase by 8.4%. March trade surplus stood at 47.38 billion.
Chinese foreign trade… Source: Bloomberg
Exports show momentum at a rate similar to the 16.3% increase in the first 2 months of the year. PMIs for major trading partners the US, eurozone and Japan were all firmly in expansion territory in March. Import growth, on the other hand, slowed down on an annual basis after a 15.5% increase in the first two months. This also reflects the softer demand for imported materials in the mid-level sectors and the previous year's high floor. Interruptions in the supply chain also seem to have had a negative impact on imports of iron and steel and auto parts.
Due to the slowdown in domestic demand conditions and economic activity in China, it puts pressure on growth. Hence, more growth-oriented policy moves and support will come from the Communist Party government and the PBOC. The PBOC will continue to lower interest rates.
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