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Economist Ho Woei Chen, CFA, at UOB Group, reviews the recent trade results in the Chinese economy.

Key Quotes

“China’s Jan-Feb exports and imports were both above market’s expectations. In USDterms, exports surged by 60.6% y/y (Bloomberg est: +40.0% y/y; Dec: 18.1% y/y) while imports rose 22.2% y/y (Bloomberg est: +16.0% y/y; Dec: 6.5% y/y) YTD.”

“A number of factors have contributed to the stronger-than-expected trade numbers including a low base of comparison, improving demand and domestic travel restrictions that would have allowed factories to resume production faster post-Lunar New Year holidays.”

“Overall, China’s trade in Jan-Feb is consistent with continued economic recovery which is being led by improving external demand where exports have outperformed the recovery in imports so far. Pent-up demand and vaccination rollout worldwide will likely provide further support to the growth recovery in China this year while downside risks include pandemic resurgence and USChina trade tensions which could limit the export expansion ahead. That said, such buoyant growth rates in Jan-Feb are unlikely to be sustained into the rest of 2021, especially as the low base effect dissipates in the subsequent months. We maintain our GDP growth forecast for China at 8.5% in 2021 (2020: 2.3%).”