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China Gets Some Good Trade News

Commuters in the Pudong Business Area of Shanghai as Plenum ConcludesCommuters in the Pudong Business Area of Shanghai as Plenum Concludes
Pedestrians walk past the Oriental Pearl Tower in Shanghai.Photograph by Qilai Shen—Bloomberg/Getty Images

China’s imports and exports were a positive surprise for economists in March.

Mixed with signs earlier this year that China’s economy was shedding its on-the-edge-of-crisis diagnosis, today’s release offers more reassurances that the economy is stabilizing.

March export growth of 11.5% beat economists’ forecasts and was the first positive reading since June 2015. (It was also the first answer to a 25% export decline last month.) But exports are of only limited use in evaluating China because the recovering economies in Europe and Asia were behind their rise, something out of China’s control. The data were also skewed because of a national holiday.

 

Imports provide the better picture, and evaluating them is a game of expectations. March imports contracted by 7.6% in U.S. dollar figures year-over-year, which wasn’t bad considering economists’ were bracing for negative 10.1%.

In terms of volume, not dollar value, which is still depressed because of commodities’ fall, the import scene was even brighter. China imported 6.5% more iron ore year-over-year, 15.6% more coal, and 3.6% more copper, spurred by a resurgent real estate sector in China, itself spurred by government incentives to buy.

The trade data, as well as the rebound in construction starts, fading pressure on the yuan, and the recovery of commodity prices have led investors to accept that “muddling through, rather than imminent collapse, is the likely scenario for 2016,” Gavekal Economics economist Andrew Batson wrote today.

This doesn’t hide the fact that longer-term problems afflicting the country’s economy are getting worse, he notes. Those includes rising government debt and the marginalization of private companies, whose share of capital spending is declining amid government support for state-owned enterprises.

The next release for China’s economic prognosis comes Friday, when first quarter GDP is announced. Economists polled by Bloomberg expect 6.7% growth.