Instant view: China records surprise trade surplus in March

BEIJING (Reuters) - China recorded a $5.35 billion trade surplus in March as import growth eased back from a 13-month peak while exports grew faster than expected, customs data showed on Tuesday.

March data provides the first hard economic numbers of the year not distorted by the impact of Lunar New Year holidays which fell in January this year, causing considerable skew in comparisons with the February 2011 holiday.

The government's official forecast is for export and import growth to average 10 percent through the course of 2012.

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KEY POINTS:

-- Exports up 8.9 pct yr/yr (forecast up 7.2 pct) vs. 18.4 pct in Feb

-- Imports up 5.3 pct yr/yr (forecast up 9.0 pct) vs. 39.6 pct in Feb

-- Trade surplus $5.3 billion (forecast -$1.3 billion ) vs. -$31.5 billion in Feb

COMMENTARY:

HUA ZHONGWEI, ANALYST WITH HUACHUANG SECURITIES, BEIJING

"China's exports will be stable but weak in 2012 on the assumption that the global economy is on a mild recovery.

"As we all know, Chinese Premier Wen Jiabao has ordered China to import more, and if China's national purchases increase significantly, it's still possible for China to report monthly trade deficits.

"For the Chinese yuan, the exchange rate now is quite close to a balanced level, the yuan exchange rate will be more flexible moving in both ways."

ZHOU HAO, ECONOMIST WITH ANZ BANK, SHANGHAI

"The trade data looks okay... it shows the global economy is recovering, albeit slowly. Given that China had a trade surplus in the first quarter versus a deficit in the Q1 last year, it indicates a positive contribution to GDP growth. We reckon Q1 GDP growth should be 8.6 percent. I think the market is a bit too pessimistic about China's economy."

WANG HU, ANANLYST AT GUOTAI JUNAN SECURITIES, SHANGHAI:

"March exports are higher than market expectation, thanks to the stronger-than-expected recovery in the U.S. economy since the fourth quarter of last year.

"Import growth last month is a bit weaker, which is in line with other industrial activity data and reflects a slowing demand from the domestic economy.

"We expect the trade surplus to continue into the second quarter, as Chinese factories' exports in the second quarter typically grow faster than the first quarter.

"But the full-year trade surplus is likely to further narrow down to 100 billion yuan this year."

DARIUSZ KOWALCZYK, ECONOMIST, CREDIT AGRICOLE CIB, HONG KONG

"The key point is that the export growth was up from 6.8 percent year-on-year in the January-February period. Acceleration in exports may well be slower in volume terms, but the data still highlights the fact that China can continue to count on foreign demand to partly mitigate for weakening domestic demand.

"Q1 saw a $0.7 billion trade surplus, up from the $0.8 billion deficit a year earlier, which suggests that trade may add to Q1 GDP growth. This suggests that the yuan can still be allowed to appreciate a bit as Beijing may be somewhat less concerned about competitiveness of its exporters."

LINKS:

For details, see the customs website in Chinese, http://www.customs.gov.cn.

MARKET REACTION:

The Shanghai stock market maintained its downward track, off 0.96 percent by 0330 GMT. The Chinese yuan was little changed at 6.307 to the dollar.

BACKGROUND:

-- China's trade surplus narrowed for a third straight year to $155 billion last year, from $183 billion in 2010, $196 billion in 2009 and $296 billion in 2008.

-- China aims for its total trade to grow at an average pace of 10 percent in the years between 2011 and 2015, Commerce Ministry Chen Deming said.

-- China's trade surplus as a share of gross domestic product (GDP) dropped to about 2 percent in 2011 from 3.1 percent in 2010, the Commerce Ministry said.

(Reporting by Beijing Economics Team; Editing by Nick Edwards)

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