Exports fall but ‘robust’ growth ahead

First-quarter trade fluctuations will stabilise as demand rises, analysts say China’s export growth declined significantly in March compared with last year, but with shipments in the first quarter overall returning to expansion, a recovery in overseas markets as well as in the digital economy is set to lead to “robust” expansion this year despite geopolitical headwinds. Exports fell by 7.5 per cent from a year earlier in March to US$279.7 billion, according to customs data released yesterday. The reading was worse than the expected fall of 2.1 per cent surveyed by Chinese financial data provider Wind, and was in sharp contrast to the 7.1 per cent growth in combined figures for January and February. It was dragged down because of a higher base in the same period last year, when China reported robust growth of 14.8 per cent at US$315.59 billion – the highest level recorded in March. But on a quarterly basis, exports grew by 1.5 per cent in the first three months of the year, rebounding from a contraction of 1.2 per cent in the previous quarter, according to Zhang Zhiwei, chief economist at Pinpoint Asset Management. “This shows a reasonable story about external demand,” he said. Last year, China experienced its first decline in export growth in seven years, with shipments dropping by 4.6 per cent because of weak external demand. It created additional challenges amid Beijing’s efforts to revive the post-pandemic economy, as it was also grappling with an exodus of foreign investment, waning market confidence and potential trade barriers. China still faced with trade headwinds due to persistent geopolitical tensions and rising protectionism, but positive signs have also surfaced, General Administration of Customs vice-minister Wang Lingjun yesterday said. “Global trade has shown signs of stabilising and improving,” he said. A March customs survey showed more enterprises saw a “significant rise” in orders from the previous month, he added. “We expect that trade will continue to improve in the second quarter and remain on the upwards trajectory in the first half of the year,” Wang said. Imports in March, meanwhile, dropped by 1.9 per cent from a year earlier, in contrast to 3.5 per cent growth in the first two months of the year, and worse than Wind’s survey for 0.6 per cent growth. It brought China’s trade surplus to US$58.6 billion in March, compared with US$125.1 billion in the first two months of the year. “The decline in exports was mainly dragged down by last year’s high base, and China’s export recovery remains ideal if excluding the base effect,” said Larry Hu, chief China economist at Macquarie Capital. China’s trade figures have shown significant fluctuations in the first quarter due to the turbulent base last year, but such disruptions were expected to stabilise in the coming months, Hu added. “China will see relatively robust export growth of around 5 per cent this year, largely due to a strong recovery in demand in overseas markets, such as the US,” Hu said. “However, import growth may remain at zero per cent, partly due to sluggish domestic demand.” Exports of cars, including electric vehicles, continued to soar in the first quarter, rising by 23.9 per cent year on year in terms of volume. Electric vehicle exports, along with other new-energy products, are at the centre of the escalating trade tensions with the European Union and the United States. “China is likely to see annual exports grow by 4 per cent, driven by fast growth in green technology and firms lowering prices for other products in 2024,” said Gary Ng, a senior economist at Natixis Hong Kong. “As the global tech cycle recovers, China will begin to see stronger export momentum, a rare economic engine that will see a cyclical rebound in 2024.” The value of China’s semiconductor exports rose by 19.7 per cent year on year in the first three months of the year, while shipment volumes rose by 3 per cent, official data showed. In March, China’s exports to the United States and the European Union dropped by around 15 per cent year on year, while shipments to the Association of Southeast Asian Nations fell by 6.3 per cent.

As the global tech cycle recovers, China will begin to see stronger export momentum GARY NG, SENIOR ECONOMIST AT NATIXIS