- China recorded a shock trade deficit of $US4.98 billion in March, the first in more than a year.
- Imports surged by 14.4% from a year earlier while exports fell 2.7% over the same period.
- China’s trade surplus with the US fell to $US15.43 billion, below the $US20.96 billion level of February.
China recorded a surprise trade deficit in March, driven by a steep decline in exports.
According to China’s General Administration of Customs, a deficit of $US4.98 billion was recorded, surprising economists who were expecting a surplus of $US27.21 billion.
It was the first deficit since since February 2017, and a stark turnaround from the $US33.75 billion surplus of February.
The shifting timing of Lunar New Year celebrations in China, seeing the entire nation break for a week-long holiday, often creates seasonal distortions in Chinese economic data during this time of the year.
Helping to explain the unexpected headline deficit, Customs said the value of exports slid by 2.7% from a year earlier, well below the 10% increase forecast by economists.
While a shock result, indicating that global demand suddenly weakened in March, markets will likely have to wait until the April trade data is released next month to determine whether this was merely a statistical aberration.
It was also well below the 44% surge seen in the 12 months to February, a result that was undoubtedly impacted by Lunar New Year distortions.
Providing a better indication on overall global demand, Customs said the value of exports grew by 14.1% over the March quarter compared to the same period a year earlier.
On the other side of the trade ledger, and indicating that Chinese demand for raw materials remained firm, Customs said imports surged 14.4% from a year earlier, above the 6.3% increase of February and forecasts for a smaller acceleration of 10%.
According to Reuters, shipments of copper, crude oil, iron ore and soybeans all rose from the levels reported in February.
Between January and March, the value of imports jumped by 18.9% from a year earlier, again, another result pointing to continued strength in the Chinese economy at the start of 2018.
While China’s overall trade balance went into the red during March, it’s trade balance with the United States did not.
Customs reported a trade surplus of $US15.43 billion with the US, below the $US20.96 billion level seen in February.
Over the March quarter as a whole, China’s exports to the US rose 14.8% from a year earlier, outpacing a 8.9% increase in imports over the same period, seeing its trade surplus with the US swell to $US58.25 billion.
China’s ballooning trade surplus with the United States has dominated geopolitical and financial market headlines over the past month with both sides announcing proposed tariffs on the others imports, creating concerns over the = tit-for-tat trade spat to escalate into something far more sinister.
A speech from Chinese President Xi Jinping earlier this week helped to alleviate investor concerns, hinting that he was willing to negotiate with the US.
However, the two sides still appear to be a long way from finding common ground based on commentary in recent days.