China Feb exports surge most in 3 years as trade war fears build

BEIJING: China’s exports unexpectedly surged at the fastest pace in three years in February, suggesting both its economy and global growth remain resilient even as trade relations with the United States rapidly deteriorate.
Trade tensions have jumped to the top of the list of risks facing China this year, with planned US tariffs on steel and aluminium signalling more measures may be on the way, Zhou Hao, senior emerging markets economist at Commerzbank, told the Reuters Global Markets Forum this week.
China’s February exports rose 44.5 per cent from a year earlier, far more than analysts’ median forecast for a 13.6 per cent increase and January’s 11.1 per cent gain, official data showed on Thursday.
Imports grew 6.3 per cent, missing forecasts for 9.7 per cent growth and down from a sharper-than-expected 36.9 per cent jump in January.
Analysts caution that Chinese data early in the year can be heavily distorted by the timing of the Lunar New Year holiday, which fell in February this year but in January in 2017.
But combined January-February data also showed a dramatic acceleration in export growth, good news for Beijing as it tries to crack down on risks in the financial system without sharply braking economic activity.
Exports rose 24.4 per cent in January-February on-year, eclipsing 10.8 per cent in December and up from single-digit growth in the same period last year. The gains came despite a much stronger yuan currency which is worrying the country’s exporters.
“The broad-based recovery in China’s major export markets could explain part of the reason why exports were still quite strong,” said Betty Wang, senior China economist at ANZ in Hong Kong.
But tension with the US “is definitely a near-term concern and a near-term downside risk to China’s trade outlook,” she added.
China’s goods surplus with the United States, a sore spot in relations between the two nations, narrowed slightly last month but is higher so far this year than at the same point last year. China’s trade surplus with the US was $20.96 billion in February compared with $21.895 billion in January.
Boosted by a global trade boom, China’s exports last year grew the fastest since 2013 and served as one of the key drivers behind the economy’s forecast-beating 6.9 per cent expansion.
But tough US trade talk last year is now turning into action, clouding the outlook for a repeat performance.
President Donald Trump is expected to sign a proclamation on Thursday or Friday to establish the steel and aluminium tariffs, to counter cheap imports, especially from China, though close US allies may get exemptions.— Reuters