China's exports rebound unexpectedly to growth in March

China’s exports rebounded unexpectedly to growth in March despite a decline in U.S. and European demand following interest rate hikes to cool inflation.

Exports rose 14.8% over a year earlier to $315.6 billion, recovering from a 6.8% decline in January and February, customs data showed Thursday. Imports sank 1.4% to $227.4 billion, a smaller contraction than the 10.2% slide in the previous two months.

China’s politically sensitive global trade surplus widened by 82% over a year earlier to $88.2 billion.

Exports to the United States and the 27-nation European Union, China’s biggest foreign markets, declined after the Federal Reserve and other central banks raised rates to slow consumer and business activity. That was offset by double-digit gains in sales to Canada, Indonesia, Russia and other markets.

“The current external environment still is severe and complex,” said a government spokesperson, Liu Daliang, at a news conference.

Trade weakness adds to complications for President Xi Jinping’s government, which is trying to revive economic growth that sank last year to 3%, the second-weakest rate since the 1970s. The ruling Communist Party set this year’s growth target at “around 5%.”

In the first three months of the year, exports edged up 0.5% over the same period of 2022 to $821.8 billion, the General Administration of Customs of China reported. Total imports contracted 7.1% to $617.1 billion.

A revival in Chinese demand would be a boost to global suppliers, replacing weak U.S., European and Japanese sales. China is the biggest export customer for its Asian neighbors and a key consumer market.

Retail sales and other activity are gradually improving after anti-virus restrictions that kept millions of people at home and temporarily shut down Shanghai and other industrial centers were lifted in December.

The economy also is under pressure from tighter controls on the use of debt in China's vast real estate industry, which triggered a slump in mid-2021.

Exports to the United States slid 7.7% in March from a year earlier to $45.9 billion, an improvement over the 21.8% contraction in January and February.

Imports of U.S. goods gained 5.6% to $16.1 billion, rebounding from a 5% decline in the first two months of the year. The Chinese trade surplus with the United States shrank by 14% compared with a year earlier to $27.6 billion.

Imports from Russia, mostly oil and gas, surged 40.5% over a year ago to $11 billion, accelerating from a 31.3% increase in January and February.

China, the biggest global energy consumer, has stepped up purchases from Russia to take advantage of price discounts after Washington, Europe and Japan cut imports to punish President Vladimir Putin’s government for its attack on Ukraine.

China can buy Russian oil and gas without triggering Western sanctions. That helps to buoy the Kremlin’s foreign revenue, but President Joe Biden has warned Beijing against helping Moscow’s military.

Exports to Russia more than doubled to $9 billion. China’s trade deficit with Russia narrowed by 50% to $2 billion.

Exports to Europe tumbled 18.2% over a year ago to $45.9 billion while imports of European goods shrank 37.2% to $25.1 billion. China’s trade surplus with Europe widened by 29.2% to $20.7 billion.