JAKARTA (TheInsiderStories) - IHS Global Insights provides updates on China’s economy. The research agency China economist Brian Jackson said China’s trade surplus will play a marginally positive role in GDP growth in the first quarter, but that will also dissipate as 2016 progresses.
Key Points:
· China’s merchandise exports improved more than expectations in March, growing for the first time in nine months.
· Initial data indicate that the improvement was broad based with exports to China’s largest trade partners, the US, EU, Hong Kong and ASEAN, all jumping from double-digit contractions to strong expansions.
· By product, exports in China’s two key product categories, mechanical and electrical products and high-tech products both surged from double digit contractions to 7.2% and 2.0% expansions, respectively.
· Volume growth improved but to a lesser degree than values in categories such as integrated circuits and motors, indicating improved pricing conditions.
· Export value growth during the first quarter of 2016 is -9.6%, compared to -2.9% in 2015.
· Imports improved to a lesser degree. Contractions continued at the headline level and with most major partners, with the exception of imports from the EU which expanded at 1.4%, their best performance in 15 months.
· Slowing contractions in imports of machinery and high-tech products were key factors in the relative headline improvement, while faster volume growth and value contractions for oil imports were a growing drag on the headline figure.
· China’s trade surplus declined USD 2.7 billion compared to February, and was the lowest surplus since March 2015. During the first quarter China’s trade surplus totaled USD 125.7 billion, compared to USD 122.3 billion during the first quarter of 2015.
Outlook :
Merchandise trade will play a marginal positive contribution to China’s GDP during the first quarter of 2016, due primarily to still sharp contractions in imports. China’s trade surplus is almost certain to compare less favorably year-on-year as 2016 progresses, diminishing net export contributions to GDP later in the year. More immediately, stronger export performance should reflect positively in tradable categories of industrial output growth for March. Authorities will publish first quarter GDP and March industrial output data on 15 April.
Improved export growth in March is likely to moderate in the coming months, but remain positive. March 2015 was the largest contraction in China’s merchandise exports for 2015, falling 15.1%, creating a weak and thus relatively easy base to grow against in 2016. While contractions continued throughout the remainder of 2015, it was at a more modest pace. (*)