Chinas Onward March

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What's going on?

Data out on Thursday showed that March was kind to China, with exports defying economists expectations.

What does this mean?

Nobody was holding out much hope for Chinas exports this time around. Theyd already dropped 6.8% in January and February, and with South Korean exports normally a global trade bellwether plunging further last month, a weak March seemed to be written in the stars. At any rate, it was written in the forecasts, with economists betting on a 7%-plus drop that never actually materialized.

See, despite the sluggish US market, demand remained strong elsewhere especially in Southeast Asia and it didnt hurt that Chinas factories finally returned to business as usual. Cars were the top performers, with yearly exports up 82% in dollar terms, followed by steel products and clothing. In the end, then, total exports grew by a wholly unexpected 14.8% the biggest divergence from expectations in years.

Why should I care?

The bigger picture: No training wheels.
Thriving exports were a life-support machine for Chinas economy during the countrys Covid lockdowns and this upswing will only help propel the country toward its growth targets. Mind you, the World Trade Organization sees global trade dipping below historic growth trends this year and things could get especially thorny if the US stagnates in the second half of 2023. That might hit Chinas exports but if economists are right that theres a new consumer-focused stimulus program in the pipeline, then theres hope the domestic economy could plug the gap.

Zooming out: Bei-bling.
The worlds biggest luxury group, LVMH, is feeling pretty bullish about Chinas prospects after its own strong results this week. While its US business struggled, its Asian operations, led by China, picked up the slack. That could be good news for other European luxury firms too which might be why the likes of Richemont, Herms, and Moncler also saw their stocks jump.

Originally posted as part of the Finimize daily email.

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