Back to Trade Surplus: China Reverses Sharp February Contraction
China's trade balance swung back into positive territory in March as the country's import growth slowed from a 13-month peak and exports grew faster than expected. March's surplus of $5.35 billion came as a surprise to many analysts and sharply reverses China's massive $31.5 billion deficit in February - the country's largest trade gap in 22 years. Returning to surplus, exports grew 8.9 percent year-on-year to $165.6 billion while imports grew 5.3 percent y-o-y to $160.3 billion, trade data showed on Tuesday.
While the growth numbers are considerably lower than China's double-digit precedent in recent years, March's numbers are seen as the first true economic figures for China, after several trade distortions during the Lunar New Year period in January-February when companies close for a week or more.
After a sharp $31.5 billion deficit in February, the largest in 22 years for China, analysts were predicting a $3.2 billion deficit for March, according to a median forecast of 15 economists polled by Dow Jones Newswires.
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According to government custom officials, China is still on-course for an average 10 percent export and import expansion in 2012.
The March surplus is likely to renew calls in the United States and elsewhere for China to allow a further appreciation of the renminbi, a call that China has flatly rejected on numerous occasions.
Earlier this year, Chinese prime minister Wen Jiabao said the yuan has already reached its peak, and even raised the possibility of increasing tax rebates for exporters.
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But despite the unexpected return to surplus, the relatively slack pace of export growth may still concern investors who believe the risks of recession in the debt-ridden EU could be a dangerous drag on growth in the world's number-two economy.
China's flagging domestic demand as its relatively robust economy slows is a generally bad sign for Australia, Brazil and Asian economies that count on Chinese customers to buy oil, iron ore and industrial components.
Furthermore, inflation data published on Monday showed a more-than-expected 3.6 percent rate, an unwelcomed rebound in prices that could limit the central government's scope for policy loosening.
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