China's exports on the radar, contracting but not concerning - UOB

Analysts at UOB noted that China’s exports reported this week unexpectedly contracted in Feb in USDterms, falling by 1.3% y/y against market’s forecast of a double-digit growth. 

Key Quotes:

"Exports to US, Japan, EU, Australia and India contracted in the month. Meanwhile, imports surged 38.1% y/y in Feb, leading to a rare trade deficit in China amounting to US$9.15bn in the month – the first deficit since Feb 2014. Even with the removal of the Lunar New Year effects, for Jan-Feb, exports were up around 3% y/y, lagging the performance in South Korea and Taiwan."

"Nonetheless, robust imports pointed to strong domestic demand and building activities. The contraction in exports to the US and China’s Feb trade deficit could temporarily take some pressure off from the US which has pointed to China’s large trade surplus with the country. However, this is only temporary as China’s exports are still expected to improve with the recovery in global demand, boosted by weakness in the CNY. Furthermore the Feb’s trade deficit was due to the surge in imports which we do not expect to be sustainable in the coming months."