Chinese trade data annihilated analyst expectations for February. Exports grew by a whopping 46% while imports soared 45%.
The export gain in February was more than the 38.3 per cent median estimate in a Bloomberg News survey of 28 economists. Imports topped a 38 per cent estimate and the trade surplus was in line with forecasts.
Central bank Governor Zhou Xiaochuan said on March 6 that policy makers must be “very cautious” in timing an exit as a world recovery isn’t yet solid. Commerce Minister Chen Deming said the same day that it was too early to say that exports had recovered from the global financial crisis, and that the trade surplus for the past two months combined had contracted by 50 per cent.
While this will only strengthen the case that China’s economic stimulus might be excessive, it’s important to note that China’s trade surplus contracted substantially recently, thus the nation has some political cover to keep the yuan pegged to the dollar as it is. China could easily hike the yuan at any time, but to us this data doesn’t really increase the urgency to do so.