China exports regain momentum in March

It grew 8.9% yoy above market expectations and is fueling hopes of 13% export growth in 2012, says CIMB.

Combined with a smaller-than-anticipated March imports of 5.3%, China is experiencing a small trade surplus of roughly $1.1 billion, a net effect that should help push the first half GDP growth rate instead of dragging it down.

Here's more from CIMB:

Not wilting. China’s March exports grew 8.9% yoy, beating consensus and our forecasts of +7.0% and +3.1%. With new export orders turning up, we maintain our export-growth forecast of 13% for the year (Jan-Mar 12: 7.6%). March’s imports grew 5.3% yoy vs. consensus estimate of 9%, with 1Q12 import growth of 6.8% yoy. The net effect of a small trade surplus of US$1.1bn suggests that net exports will add to, rather than subtract from, 1Q12 GDP growth.

1Q12 trade less gloomy than expected. China’s March export growth was widely expected to slow from its high year-ago base (Mar 11: 35.8%). But the 8.9% yoy rise to a 3-month high of US$166.6bn easily beats consensus and our estimates of +7% and +3% respectively. The lagged impact of weaker global confidence hasn’t slammed as hard with 1Q12 exports rising 7.6% yoy vs. 26.4% in 1Q11. With new export orders turning up, we maintain our 2012 export-growth forecast of 13% (20.3% in 2011): 9.4% for 1H12 (24.2% in 1H11) and 17% for 2H12 (17.4% in 2H11).

Recall that January’s import bill had slipped by a larger-than-expected 15% yoy, the biggest in over two years, sparking hard-landing anxieties. While March’s import growth of 5.3% lagged Feb’s 40% spike, the US$160.3bn bill was also a 3-month high. Led by steady imports of commodity, raw-material as well as machinery purchases, import growth of 6.8% yoy in 1Q12 suggests steady domestic demand (slower, no doubt, as 1Q11 imports had grown at a blistering 33% yoy). This moderation is hardly surprising as policy planners keep manoeuvring for longer-term sustainable growth.

Surprise trade surplus in 1Q12. With export growth exceeding import growth, China booked a small trade surplus in March as well as 1Q12. 1Q12’s trade surplus of US$1.1bn (vs. 1Q11’s deficit of US$2.2bn) implies that net exports will probably add to 1Q12 GDP growth and present upside to consensus and our forecasts of 8.4% and 8.3% respectively. 1Q12 GDP growth data will be released this Friday.

Export growth probably troughed in 1Q12, at 7.6%. As such, growth should gather pace in 2Q12, though still at 8-12%, considering the lingering drag from Europe and a high year-ago base of 22%. Leading indicators all point to a pick-up in exports although we do not expect any sparks. The 45% YTD bounce in outbound freight rates, allied with March’s New Export Orders PMI (+0.8 pt to 51.9, second consecutive month of expansion) and rising outbound freight rates (Shanghai Export Containerized Freight Index up 45% YTD), all paint a rosier trade picture.