Trade is giving China’s economic recovery a boost

China’s economic recovery is continuing to gather steam.

Imports surged more than 38% last month in US dollar terms compared to a year earlier, according to customs data released Tuesday. It’s a sign that demand within China is picking up as the country moves past the worst of the economic damage wrought by the coronavirus pandemic.

Exports grew by nearly 31% in March compared to a year prior — less than analyst expectations, but still strong. The surge is partly because China had shut down large swaths of its economy in early 2020 to contain the coronavirus outbreak.

China’s overall trade surplus narrowed to $13.8 billion, its lowest since Covid-19 hit.

“China trade figures … extended its robust trend in March,” wrote analysts at Mizuho Bank in a Tuesday note. “The global reopening amid the vaccinations rollouts and improving global outlook should hold the external demand supportive, while the global supply-chain normalization could drive the production back to the original regions from China.”

The world’s second largest economy has performed well relative to the rest of the globe. China was the only major economy to record growth in 2020, expanding 2.3% as many countries struggled to contain the coronavirus pandemic. Chinese authorities called last year’s performance “better than we had expected.”

The latest trade figures are another bright spot, coming days before China is expected to report GDP data for the first three months of 2021.

China’s construction sector has been particularly strong, according to Julian Evans-Pritchard, senior China economist at Capital Economics, who wrote in a Tuesday note that the industry may continue to shore up imports for a while longer.

But he expected shipments to soften later this year, noting that Beijing is expected to scale back some of its policies supporting the economy. Premier Li Keqiang said earlier this year that China would reduce its budget deficit slightly this year to about 3.2%, “in view of the effective containment of Covid-19 and gradual economic recovery.”

China has set a growth target of more than 6% in 2021. That’s more than what China would need to accomplish President Xi Jinping’s long-term goal for the economy, though still less aggressive than what some observers have said they would have liked to see for the country. The International Monetary Fund is forecasting much stronger growth at 8.4%.