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China’s Trade Begins 2024 with a 7.1% Rise in Exports, Surpassing Expectations and Fuelling Optimistic Forecasts

China experienced a surge in exports during January and February compared to the previous year, with imports also increasing by 3.5%, surpassing initial projections. Premier Li Qiang pledged to strengthen the trade sector amidst China’s array of economic challenges in his inaugural government work report on Tuesday.

China’s exports exceeded expectations in the first two months of the year, despite facing challenges such as subdued overseas demand and geopolitical tensions in the world’s second-largest economy.

According to customs data released on Thursday, exports surged by 7.1% from the previous year to reach US$528 billion in combined figures for January and February. This figure surpassed predictions by Chinese financial data provider Wind, which anticipated a 3.9% increase, and also exceeded the 2.3% rise recorded in December.

In contrast, imports saw a 3.5% year-on-year increase, compared to a mere 0.2% growth in December, surpassing market expectations for a 0.7% decline. To mitigate the effects of the Lunar New Year holiday, which occurs at varying times in January and February each year, China consolidates its trade data for these two months.

“China’s exports have benefited from the global tech cycle recovery and lower destock pressure, which aligns with other tech-savvy markets like Korea,” said Gary Ng, a senior economist with Natixis Corporate and Investment Banking.

“However, concern remains on the weak imports, illustrating the still challenging conditions in domestic demand. After a year of decline, China’s exports and imports is likely to rebound by 4 per cent and 3.2 per cent in 2024.”

The robust recovery was also influenced by the comparably low baseline of the previous year’s corresponding period, during which China’s exports declined by 6.8% and imports plummeted by 10.2% due to the effects of the coronavirus pandemic.

China faces various economic challenges, including a downturn in the property market, escalating local government debts, deflationary pressures, and geopolitical tensions. These factors collectively undermine confidence among both foreign investors and the domestic private sector.