China’s exports surge 45% in Feb
beijing — China’s exports unexpectedly surged at the fastest pace in three years in February, suggesting both its economy and global growth remain resilient even as trade relations with the United States rapidly deteriorate.
Trade tensions have jumped to the top of the list of risks facing China this year, with planned US tariffs on steel and aluminium signalling more measures may be on the way, Zhou Hao, senior emerging markets economist at Commerzbank, told the Reuters Global Markets Forum this week.
China’s February exports rose 44.5 per cent from a year earlier, far more than analysts’ median forecast for a 13.6 per cent increase and January’s 11.1 per cent gain, official data showed on Thursday.
Imports grew 6.3 per cent, missing forecasts for 9.7 per cent growth and down from a sharper than - expected 36.9 per cent jump in January.
Analysts caution that Chinese data early in the year can be heavily distorted by the timing of the Lunar New Year holiday, which fell in February this year but in January in 2017.
But combined January-February data also showed a dramatic acceleration in export growth, good news for Beijing as it tries to crack down on risks in the financial system without sharply braking economic activity.
Exports rose 24.4 per cent in Jan-Feb on-year, eclipsing 10.8 per cent in December and up from single-digit growth in the same period
The broad-based recovery in China’s major export markets could explain part of the reason why exports were still quite strong Betty Wang, economist at ANZ
last year. The gains came despite a much stronger yuan currency which is worrying the country’s exporters.
“The broad-based recovery in China’s major export markets could explain part of the reason why exports were still quite strong,” said Betty Wang, senior China economist at ANZ in Hong Kong.
But tension with the US “is definitely a near-term concern and a near-term downside risk to China’s trade outlook,” she added.
China’s goods surplus with the United States, a sore spot in relations between the two nations, narrowed slightly last month but is higher so far this year than at the same point last year.
China’s trade surplus with the US was $20.96 billion in February compared with $21.895 billion in January. Boosted by a global trade boom, China’s exports last year grew the fastest since 2013 and served as one of the key drivers behind the economy’s forecast-beating 6.9 per cent expansion.
But tough US trade talk last year is now turning into action, clouding the outlook for a repeat performance.
US President Donald Trump is expected to sign a proclamation on Thursday or Friday to establish the steel and aluminium tariffs, to counter cheap imports, especially from China, though close US allies may get exemptions.
The measures are expected to go into effect in about two weeks, but economists see little immediate impact on China.
China has already reduced steel exports to the US to a trickle in response to strong demand at home and US anti-dupming duties, and while aluminium shipments account for around 10 per cent of its global exports of the metal, the number is still small compared with China’s total exports, according to ING economist Iris Pang.
“All in all, the direct impact on China is minimal,” Pang said in a note published on Thursday.
While China’s global steel exports have dropped by almost a third this year, tariffs on aluminium may be an easier sell for Trump, as China’s shipments increased over 35 per cent in the first two months of the year.
Over time, however, any additional punitive US measures and retaliations by China or its other major trading partners would reduce global trade flows, disrupt international supply chains and drag on global growth.
China may be far more vulnerable to US plans to combat intellectual property theft, which could hit its sales of hi-tech, high-value products. China’s global tech exports saw strong double-digit gains in the first two months of this year.
Foreign Minister Wang Yi said on Thursday that China would make a necessary response in the event of a trade war with the US but said such a war would only harm all sides.
“On paper, China has more to lose from a trade war — it exports far more to the US than it imports,” Capital Economics said. —