The main news overnight was the Chinese February trade balance, which if the past several years were any indication, would have been a deficit in keeping with the cyclical economic weakness resulting from the Chinese Lunar New Year. Surprisingly, instead of a deficit, as SocGen explains Chinese exports came in massively above expectations in February, while imports were on the weak side. The strength of exports was bewildering, especially when it was, to a large part, a result of strong exports to the G2.
Specifically, China’s exports increased 21.8% in February, massively above expectations of a 8.1% rise, and despite the late timing of the Spring Festival. Hence, export growth in January and February was sharply up to +23.6% from +9.4% in Q4 2012, very much at odds with the lack of improvement in Korean and Taiwanese exports during the same period. China’s export data depicted a very different picture of the global trade from that indicated by others’ figures.
And while exports were soaring, for reasons largely unknown as neither key trading partners US or Europe recorded a spike in Chinese imports, China’s imports contracted a whopping 15.2% Y/Y in February, much more than street estimates of a -8% drop. Combining January and February figures, imports grew 5% yoy, moderately faster than the 2.7% in Q4. The far slower pace of import growth confirms pervasive skepticism toward the Chinese recovery. Import volume growth of many major commodities decelerated.