China’s exports rise unexpectedly, but economists warn of weakness ahead

Exports from China were up 14.8% year-on-year in March with imports falling by 1.4% — a lower fall than the 5% forecasted decline.
Containers and cargo vessels at the Qingdao port in Shandong province, China, 9 May 2022. Picture taken with a drone.
Containers and cargo vessels at the Qingdao port in Shandong province, China, 9 May 2022. Picture taken with a drone.

China's exports unexpectedly surged in March, with officials flagging rising demand for electric vehicles, but analysts cautioned the improvement partly reflects suppliers catching up with unfulfilled orders after last year's COVID-19 disruptions.

Exports in March shot up 14.8% from a year ago, snapping five straight months of declines and stunning economists who predicted a 7% fall in a Reuters poll.

"The wave of COVID outbreaks in December and January likely depleted factories' inventories. Now that factories are running at full capacity, they caught up the cumulated orders from the past," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

"The strong export growth is unlikely to sustain, given the weak global macro outlook," he added.

Meanwhile, imports fell less than expected, with economists pointing to an acceleration in the purchase of agricultural products, especially soybeans, as providing some support.

Imports dropped just 1.4%, lower than the 5% decline forecast and the 10.2% contraction in the previous two months. Increases in crude oil, iron ore, and soybeans imports in the month were offset by a decline in copper imports.


Financial markets took little cheer from the upbeat export data, as investors remained wary about the outlook, although the Australian dollar, seen as a proxy for Chinese demand for commodities, rose slightly.

Lv Daliang, spokesperson of the General Administration of Customs, attributed the upside surprise to strength in demand for electric vehicles, solar products, and lithium batteries.

However, he warned conditions could worsen going forward.

"The external environment is still severe and complicated at present," Lv told reporters in Beijing on Thursday. "Sluggish external demand and geopolitical factors will bring greater challenges to China's trade development," he added.

China's strong performance contrasts with that of other Asian exporters, such as South Korea and Vietnam, which have both seen exports decline in the first few months of 2023, contributing to doubts that it can be sustained.

"We aren't convinced that this rebound will be sustained, given the still gloomy outlook for foreign demand," Capital Economics analysts said in a note.

"We expect most developed economies to slip into recession this year and think that the downturn in Chinese exports still has some way to run before it reaches a bottom later this year."

Factory surveys showed export orders falling in March, a contrast to more upbeat readings for the services sector, which has benefited from China's reopening.

China's newly appointed premier Li Qiang told a cabinet meeting last week that officials should "try every method" to grow trade with developed economies and push companies to further explore emerging market economies, such as those of Southeast Asia.

Beijing has set a growth target of around 5% for GDP this year, after severe pandemic controls last year knocked the economy to one of its slowest rates in decades. GDP rose only 3% last year.