China economic outlook brightens as trade up, tensions down
Chinese exports surged in March, the largest jump in two years, in the latest sign of robust global demand as concerns ease over a possible trade war with the US after President Donald Trump softened his stance on Beijing. The new figures, released Thursday, boost hopes that the world's number two economy is getting back on track after a recent slowdown -- it grew last year at its slowest pace in a quarter of a century. Trump, who had a cordial summit with Chinese President Xi Jinping last week, reversed course on an election campaign promise to label Beijing a currency manipulator and slap punitive tariffs on Chinese imports. He traded in his acerbic denouncements of the Asian giant's "rape" of the US economy for warm praise, telling a press conference he was "very impressed" and shared "a very good chemistry" with Xi. In a positive sign for the Chinese economy, exports jumped 16.4 percent year-on-year to $180.6 billion in March, the country's customs agency said, marking a dramatic turnaround from the 1.3 percent year-on-year drop recorded in February. Imports also rose 20.3 percent year-on-year to $156.7 billion last month, Customs said, while the trade surplus increased to $23.9 billion. A pickup in external demand, surging import prices, and a stable domestic economy boosted the figures, Customs spokesman Huang Songping told a press briefing on Thursday. The March data "reflects strong domestic demand, particularly investment demand," Zhao Yang of Nomura said in a note. "China has finally caught up with the rest of Asia with the end of the trade recession," Raymond Yeung of Australia & New Zealand Banking Group told Bloomberg News. - Softening rhetoric - While recent data has suggested China's slowdown may be stabilising, the tough language deployed by Trump had raised concerns that growing friction between the world's two top traders could tank the global economy. On the campaign trail, the billionaire politician frequently took Beijing to task for its business and fiscal policies, branding the country a currency manipulator and threatening to slap 45 percent tariffs on its imports. China for years was accused of keeping its currency artificially low to make its exports cheaper and more competitive compared to US goods. But in an interview published on Wednesday in The Wall Street Journal, Trump said: "They're not currency manipulators." He added that Beijing had not been manipulating its currency for months -- a point economists have been making for a much longer time. "The risk of a trade war has diminished substantially" following recent discussions between the two leaders, said Australia & New Zealand Banking Group's Yeung. Nevertheless, the situation remains fluid. Trump has continued to hit out at China for its massive trade deficit with the US, which was $17.7 billion in March, according to the customs data. "The foreign trade situation in China is still complex with many instabilities and uncertainties, and the difficulties that China faces are not short-term ones," the agency's spokesman Huang said, adding that foreign trade expansion is likely to fall back in the second quarter. Trump and Xi have agreed to pursue a 100-day plan on trade, which could include measures to reduce the deficit. But it remains unclear how far China will go to increase US imports. "The reality is that China's domestic investments and property markets are the dominant growth drivers this year instead of trade," Betty Wang and David Qu of ANZ Research wrote in a note.
