China’s exports in March returned to growth for the first time in nine months, adding to further signs of stabilisation in the world’s second-largest economy that cheered regional investors.
March exports rose a blistering 11.5 percent from a year earlier, the first increase since June and the largest percentage rise since February 2015.
Fears of a hard landing in China even as policymakers press on with tough reforms to rebalance the economy have rattled financial markets, with investors eagerly hunting for tentative signs the economic slump may be bottoming.
Economists, however, warned that Wednesday’s data was not evidence of stronger global demand as it was heavily skewed by base effects and seasonal distortions from the Lunar New Year.
And despite signs of green shoots for China, first quarter GDP data on Friday is expected to show the economy growing at its slowest pace since the financial crisis. Combined with tepid inflation, that is likely to keep Chinese monetary policy loose for some time yet.
Investors celebrated, nevertheless, with key Chinese stock indexes hitting three-month highs and the yuan firming, while regional stock markets and the Australian dollar AUD=, which often trades as a proxy to Chinese growth, also firmed.
“China’s foreign trade sector will likely improve from last year due to low comparables, but the improvement will not be dramatic, as the trends in external markets are not great,” said Wang Tie Shi, economist with Industrial Securities.
The upside surprise comes after other March economic indicators hinted of slight improvements in the broader economy, although other surveys have shown intensifying downward pressure on wages and employment.
Imports continued to fall but less than expected, declining by 7.6 percent in dollar denominated terms and volumes of most major commodities, notably copper and iron ore, rose strongly.
That left the country with a trade surplus of $29.86 billion for the month, data from the General Administration of Customs showed, versus a forecast of $30.85 billion.
“I think we should focus on the better-than-expected imports growth rate, which means domestic demand is also recovering, driven by infrastructure investment and also the real estate sector recovery,” said Ma Xiaoping, analyst at HSBC.