Solid Chinese Trade Data Point to Robust Demand Momentum

China’s Goods exports recovered in March, lifting year-on-year growth in in Q1 to 9.6% in real terms and pointing to strengthening global demand momentum, according to Oxford Economics.

Meanwhile, imports remained strong, pushing y/y volume growth in Q1 to 13.4% and indicating continued robust domestic demand.

Oxford Economics expects exports to continue to benefit from improving global demand in the coming months, provided the risks of significant protectionist moves do not materialize.

“But we think import growth will ease later in 2017 on slower real estate activity momentum and less accommodative macro policy in China,” says a note from Oxford Economics.

Goods exports grew a hefty 16.4% y/y in US$ terms last month, lifting growth in Q1 to 8.3% y/y, a sharp turnaround from a fall of 5.2% in Q4 2016 and pointing to strengthening global demand momentum.

Based on Oxford Economic’s estimates for price developments, this implies goods export volumes were up 16.5% y/y last month and 9.6% in Q1, much more than the 1.5% y/y growth in Q4.

Oxford Economics expects China’s exports to continue to benefit from better global demand in the coming months.

“While downside risks remain, we think the risk of drastic trade tension with the US has come down after the meeting between Presidents Trump and Xi last weekend,” says the company.

Following the surge in goods imports in February – in part caused by the shifting timing of the Chinese New Year holiday – they remained strong in March, up 20.3% y/y in US$ terms.

Oxford Economics estimates that goods import volumes were up 13.4% y/y in March, further lifting the sequential 3mma  and indicating that China’s domestic demand momentum continued apace last month.

“Looking ahead, we expect growth of domestic demand and imports to ease later in 2017 due to slower real estate activity momentum and the impact from somewhat less accommodative macroeconomic policy.

“Also, with commodity prices gradually stabilizing from the strong recovery since late-2016 – year on year increases already came down in February – we expect such price inflation to render less support to headline y/y import growth in US$ terms in the coming months.”


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