China's Exports Soar Owing To EV Demand

China's exports unexpectedly increased in March, owing to strong shipments of solar products, new-energy vehicles, and lithium batteries, as supply chain conditions improved following the COVID paralysis.

Meanwhile, imports fell less than expected, with economists pointing to an increase in agricultural product purchases, particularly soybeans, as providing some support.

Exports increased 14.8 percent year on year in March, snapping a five-month decline and outperforming analysts' forecast of a 7.0 percent drop. Imports fell 1.4 percent, less than the 5.0 percent drop predicted and the 10.2 percent contraction in the previous two months.

While the figures provide some relief to investors concerned about the health of the world's second-largest economy, analysts are sceptical that the strength can be sustained as demand in other major economies weakens.

"Export growth in China soared in March." The market was taken aback by this, according to Zhiwei Zhang, chief economist at Pinpoint Asset Management. "The positive surprise could be due in part to a low base effect - the COVID outbreaks in March last year forced many factories to close down," he added.

The General Administration of Customs' spokesperson, Lv Daliang, attributed the positive surprise to increased demand for electric vehicles, solar products, and lithium batteries.

However, he warned that things could get worse in the future.

"The external environment is still severe and complicated at present," Lv told reporters in Beijing on Thursday. "Sluggish external demand and geopolitical factors will bring greater challenges to China's trade development," he added.

Last week, newly appointed Premier Li Qiang told a cabinet meeting that officials should "try every method" to increase trade with developed economies while also encouraging companies to explore emerging market economies such as those in Southeast Asia.

China has set a GDP growth target of around 5% for this year, after severe pandemic controls last year slowed the economy to one of its slowest rates in decades. GDP increased by only 3% last year.