BEIJING (Reuters) – China's export growth unexpectedly fell in March, the first drop since February last year, which raised doubts about the health of one of the economy's main growth engines, even when Commercial tensions are rapidly escalating with the United States.
Import growth in March exceeded expectations, however, suggesting that domestic demand could be strong enough to cushion the blow of commercial shocks. That left China with an exceptional trade deficit for the month, also the first fall since last February.
The latest readings on the health of China's commercial sector follow weeks of tariff threats by Washington and Beijing, triggered by US frustration with the massive bilateral trade surplus and China's intellectual property policies, which have fueled the fears of a world trade war crisis.
March Chinese exports fell 2.7 percent from the previous year, lagging analysts' forecasts of a 10.0 percent increase, and the jump of 44.5 percent in February , which economists believe was strongly distorted by seasonal factors.
For the first quarter as a whole, however, exports still grew an abundant 14.1 percent.
Some analysts expected a decline in March exports after an unusually strong start to the year, when companies intensified shipments before the Lunar New Year holiday in mid-February. That scenario did not alter his opinion that global demand remains solid.
But a stronger currency may also be starting to erode the competitiveness of Chinese exporters. The CNY = CFXS yuan appreciated by about 3.7 percent against the US dollar in the first quarter of this year, in addition to an increase of 6.6 percent last year.
Washington or Beijing have not established a rigid timetable for the actual imposition of tariffs, which leaves the door open for negotiations and a possible compromise that could limit the damage to both parties and to other economies that depend on trade.
But analysts say that commercial threats may already be having an impact on the activity of exporters.
With the threat of tariffs affecting nearly a third of China's exports to the United States, Nomura economists say their companies can have front-end shipments earlier this year before measures take effect.
China's exports to the United States increased 14.8 percent in the first quarter from the previous year, while imports increased 8.9 percent.
That sent its quarterly trade surplus with the 19.4 percent increase from the United States to $ 58.25 billion, although the March reading dropped to $ 15.43 billion from $ 20.96 billion in February.
China's total exports of aluminum in March rose to their highest level since June, just as the United States imposed tariffs on metal and steel imports on March 23.
"We believe that export growth will decrease due to the appreciation of the yuan and trade tensions, but the strong outlook for global growth may provide some cushioning: China's imports could be more resilient than the growth of exports, in our opinion, since China has committed to increase imports, "said Lisheng Wang, Nomura economist in Hong Kong.
IMPORTS PRETEND TO PRETEND
China's total imports grew 14.4 percent compared to the previous year, exceeding analysts' forecast of 10 percent growth, and compared to growth of 6.3 percent in February.
That produced a trade deficit of $ 4.98 billion for the month, but such failures are not uncommon for China at the beginning of the year, probably due to seasonal factors.
For January-March, imports increased a strong 18.9 percent in the year.
Analysts expected China to record a trade surplus of $ 27.21 billion last month, from the February surplus of $ 33.75 billion.
Imports of basic products continued to lead the way in March, with shipments of copper, crude oil, iron ore and soybeans, all of which rose from the previous month.
China's exports boomed in world trade last year, expanding at the fastest pace since 2013 and serving as one of the main drivers behind the forecast expansion of the economy.
But the sudden rise in trade tensions with the United States is clouding the outlook for both the heavy industries of China's "old economy" and the "new economy" technology companies.
Washington says that China's trade surplus of $ 375 billion with the United States is unacceptable, and has demanded that Beijing reduce it by $ 100 billion immediately.
In a move to force China to cut billions of trade surpluses of goods with the United States, Trump released tariffs representing some $ 50 billion in technology, transportation and medical products earlier this month, with an immediate threat of retaliation from Beijing. .
China's technology sector, which is a key part of Beijing's long-term strategy "Made in China 2025" to move from cheap products to higher-value manufactures, can be particularly vulnerable.
High-tech products have been among its fastest growing export segments. China exported $ 137.8 billion in high-tech products in the first quarter, an increase of 20.5 percent year on year.
Report of Elias Glenn, Lusha Zhang and Stella Qiu; Edition of Kim Coghill