General

On April 13th, import and export data released by the General Administration of Customs showed that China's total import and export value in the first quarter of this year was $1.44 trillion, a year-on-year decrease of 2.9%. Among them, exports reached 821.83 billion US dollars, a year-on-year increase of 0.5%; Import of 617.12 billion US dollars, a year-on-year decrease of 7.1%; The trade surplus is 204.71 billion US dollars.

Calculated in RMB, China's total import and export value in the first quarter was 9.89 trillion RMB, a year-on-year increase of 4.8%. Among them, exports reached 5.65 trillion yuan, a year-on-year increase of 8.4%; Import reached 4.24 trillion yuan, a year-on-year increase of 0.2%.

As of March, China's total import and export value reached $542.99 billion, a year-on-year increase of 7.4% and a month on month increase of 32%. Among them, exports reached 315.59 billion US dollars, a year-on-year increase of 14.8%, far exceeding the market estimate of a decrease of 7.1%; Import of 227.4 billion US dollars, a year-on-year decrease of 1.4%, better than the estimated decrease of 6.4%; The trade surplus is 88.19 billion US dollars.

Calculated in RMB, China's total import and export value in March this year was 3.71 trillion RMB, a year-on-year increase of 15.5%. Among them, exports reached 2.15 trillion yuan, a year-on-year increase of 23.4%; Import of 1.55 trillion yuan, a year-on-year increase of 6.1%; The trade surplus is 601.1 billion yuan.

Lu Daliang, spokesperson for the General Administration of Customs and Director of the Department of Statistics and Analysis, stated that in January this year, imports and exports decreased by 7% due to the impact of the Spring Festival holiday; In February, it quickly transitioned from negative to positive, with import and export data showing an increase of 8% that month. In March, the year-on-year growth rate increased to 15.5%, showing a positive trend month by month. The overall growth rate in the first quarter was 4.8%, an increase of 2.6 percentage points compared to the fourth quarter of last year, and the start was stable and positive.

Export growth rate in March far exceeded expectations

Import and export data shows that in March, China's exports reached $315.59 billion, a year-on-year increase of 14.8%, far exceeding the estimated negative growth; The previous value was a decrease of 6.8% (cumulative value from January to February 2023).

Against the backdrop of the current downward trend of overseas economy and negative year-on-year growth in exports from South Korea and Vietnam in March, why has China's export growth rebounded against the trend?

Wang Qing, Chief Macro Analyst of Dongfang Jincheng, told Pengpai News that the growth rate of export volume in March far exceeded market expectations, mainly due to factors such as a low base in the same period last year, strong growth in new export momentum represented by electric vehicles, and significant growth in China's exports to emerging markets such as ASEAN. This indicates that the current foreign trade resilience is strong.

The growth rate of foreign trade exports in March exceeded expectations, fully demonstrating resilience. "Zhou Maohua, a macro researcher at the Financial Markets Department of Everbright Bank, told Pengpai News that the strong performance of foreign trade exports was still driven by slightly exceeding expectations in consumer demand from Europe and America. At the same time, China's foreign trade structure has been optimized, the export of ASEAN and countries along the the Belt and Road has continued to maintain a high boom, and the foreign trade sector has taken an active role.

Specifically, looking at the highlights of March's export data, Wang Qing stated that in March, the growth rate of imports and exports was even higher, with exports growing at 23.4% and imports achieving a year-on-year positive growth rate of 6.1%. The main reason for the difference in growth rate compared to that month in US dollars was the depreciation of the Chinese yuan against the US dollar in the past year.

In terms of base factors, Wang Qing stated that the export growth rate in March of last year had declined, and the low base effect had a certain effect on driving up the export growth rate in March of this year.

From the perspective of export structure, import and export data shows that in RMB terms, the total export of electric passenger cars, lithium batteries, and solar cells' new three types' products increased by 66.9% in the first quarter, with a year-on-year increase of over 100 billion yuan, driving up the overall export growth rate by 2 percentage points.

Wang Qing stated that the current new driving force of exports is significant. Compared to the beginning of the year, the export of electric passenger vehicles in March showed a trend of both quantity and price, reflecting the significant promotion effect of domestic manufacturing transformation and upgrading on exports.

From the perspective of external demand, Wang Qing stated that thanks to the entry into force of the RCEP (Regional Comprehensive Economic Partnership Agreement) in early 2022, tariff reduction arrangements, trade facilitation, and other measures have further reduced the cost of trade cooperation between China and ASEAN. In March, measured in US dollars, China's export growth rate to ASEAN, the largest trading partner, reached 35.4%, becoming the main reason for driving the overall export acceleration.

"At the same time, according to the data of the China Federation of Logistics and Purchasing, the PMI of Asia's manufacturing industry in March 2023 was 51.8%, running at more than 51% for two consecutive months, indicating that Asia's manufacturing industry has maintained a strong recovery trend since the beginning of the year. This is also a factor supporting the strong growth of China's exports to ASEAN." Wang Qing also said that China's exports to Russia in March increased by 136.4% year-on-year, mainly because of the Russia-Ukraine conflict that broke out at the end of February last year, This has caused some disturbance to China's exports to Russia, with a significant low base effect. In addition, in recent times, Russia has shifted more imports to China.

In terms of other trading partners, Wang Qing pointed out that the economic downturn of developed countries such as the United States and Europe was also reflected in China's exports in March. Among them, in March, China's exports to the United States decreased by 7.7% year-on-year, with negative growth for 8 consecutive months. The decline in that month narrowed by 24.1 percentage points compared to the previous month, mainly due to the change in the base during the same period last year, which does not mean that the import demand for Chinese goods from the United States has rebounded.

In fact, the sustained and significant interest rate hikes by the Federal Reserve in the early stage are exerting a strong inhibitory effect on the overall domestic demand in the United States. In addition, the recent banking crisis will further drive the economic downturn, making it difficult for China's exports to continue to turn towards positive growth in the short term. In addition, due to the sinking base in the same period last year, China's exports to the European Union increased slightly by 3.4% year-on-year in March, still significantly lagging behind the overall export growth rate. Behind this is the geopolitical conflict Due to factors such as unresolved issues and significant interest rate hikes by the European Central Bank, the EU economy has experienced a significant decline this year. Except for the following April, China's export to the EU is expected to continue to experience negative year-on-year growth in the future Wang Qing said.

The year-on-year decrease in imports has significantly narrowed

Import and export data shows that in March, China's imports reached 227.4 billion US dollars, a year-on-year decrease of 1.4%, better than the market estimate of a decrease of 6.4%; The cumulative decrease from January to February narrowed by 8.8 percentage points.

Wang Qing stated that the year-on-year decrease in import volume in March has significantly narrowed compared to January February, mainly driven by factors such as a lower base in the same period last year, continued improvement in domestic demand, and a rebound in export growth that may boost import demand in the processing trade sector; The year-on-year decline in international commodity prices in that month has widened, indicating that price factors have a downward effect on the nominal growth rate of imports.

Wang Qing pointed out that in March, the domestic manufacturing PMI continued to be in the expansion range, indicating that the macro economy continued to recover and domestic demand further improved. Meanwhile, the export growth rate rebounded significantly in March, which may also boost the import demand generated in the processing trade sector.

In terms of price factors, Wang Qing stated that in March, due to the impact of the overseas banking crisis, the prices of bulk commodities such as crude oil and non-ferrous metals fell as a whole. In addition, the base increased significantly in the same period last year. The monthly average of the RJ-CRB commodity price index decreased by 10.8% year-on-year, significantly weaker than the 2.4% increase in the previous month. Therefore, price factors are not the main reason for the narrowing of the decrease in import volume in March, and the role of quantity factors is more obvious.

Zhou Maohua stated that from the perspective of commodity imports, the prices of energy, raw materials, and other commodities fell in March, which also stimulated import demand to some extent.

From the overall situation in the first quarter, in US dollars, the cumulative import volume decreased by 7.1% year-on-year. Wang Qing stated that since the beginning of this year, against the backdrop of a rebound in domestic economic prosperity and improved domestic demand, the import growth rate has not increased but decreased. The key reason is that it is still in the early stages of economic recovery, market confidence is not yet stable, and the stage of enterprises actively replenishing inventory has not yet begun; At the beginning of the year, the performance of foreign demand was sluggish. Despite a significant rebound in export growth in March, the cumulative growth rate in the first quarter was only 0.5%, which also affected the import demand generated in China's export sector under the "big in and big out" model.

More importantly, in the first quarter of last year, due to the rise in oil prices, international commodity prices rose, and price factors played a significant role in driving up the current import volume. Under the influence of a high base, the year-on-year increase in international commodity prices in the first quarter of this year significantly converged. According to our calculations, the weakening of price factors has a significant downward effect on the year-on-year growth rate of import volume in the first quarter. "Wang Qing said.

How will foreign trade go in the future?

Looking ahead to the future export trend, Wang Qing stated that in the short term, due to the peak period of the epidemic in April last year, the low base effect of export data is prominent, which means that the export volume in April this year is still expected to achieve positive growth year-on-year. However, after May, exports may once again enter a year-on-year decline process, and the contribution of foreign demand to economic growth this year will shift from positive to negative.

We judge that with a focus on promoting rapid recovery of the domestic economy, macroeconomic policies will continue to exert efforts in boosting domestic demand for a period of time in the future. It is worth mentioning that many places are organizing foreign trade enterprises to 'go out' and 'invite in' overseas customers, significantly increasing their efforts to explore overseas markets. In addition, with the support of various stable foreign trade policies, the current rapid recovery of domestic private enterprise exports will help offset overseas demand The shortage of orders is a drag on China's exports Wang Qing said.

Zhou Maohua also stated that the outlook for foreign trade this year is still facing certain pressure, mainly due to the slowing prospects of global economic recovery, especially the headwinds facing the European and American economies, geopolitical conflicts still have some disturbance to the supply chain, and last year's high base. However, it should also be noted that China's foreign trade structure continues to optimize, the quality of foreign trade steadily improves, and the export of new energy industry chain products is expected to maintain a high level of prosperity. It is expected that foreign trade exports will maintain moderate growth.

In terms of imports, Wang Qing stated that as the domestic economic momentum gradually recovers, durable consumer goods and service consumption rebounds, infrastructure investment and manufacturing investment maintain a rapid growth level, and improving domestic demand will help import rebound.

However, due to the continuous increase in international commodity prices in the second quarter of last year, which did not decrease until June, this means that commodity prices in the second quarter of this year will face a higher year-on-year base, and the downward effect of weakened price factors on the nominal growth rate of imports will still be prominent. Wang Qing said that it is expected that the growth rate of imports in the second quarter will maintain a weak growth level near zero. In the second half of the year, as the inventory cycle is expected to switch to the active replenishment stage and the drag effect of price factors weakens, the import growth rate is expected to achieve a relatively significant rebound.

Zhou Maohua said that foreign trade opened steadily in the first quarter, easing the market's concern about foreign trade dragging down economic growth; China's foreign trade performance exceeded expectations, injecting confidence into the prospects of global economic recovery.