China’s exports will recover but trade sanctions loom

Significance Chinese exports grew by 7.1% year-on-year in US dollar terms, while imports expanded by 3.5%. The trade gap narrowed to USD39.7bn in February. Export growth was buoyed by rapid gains in the exports of semiconductors, cars, clothing and textiles, although tariffs and supply chain diversification have dented trade. Impacts Exporters of goods such as semiconductors, laptops and mobile phones will benefit from a recovery in the global electronics cycle. Automotive exports will come under more regulatory scrutiny in the EU and United States, and forthcoming trade controls will limit growth. Outbound tourism will benefit from more flight routes but fail to return to pre-pandemic levels, with Chinese households remaining cautious. Consumer goods imports will expand alongside incomes, and a growing middle class will increase interest in premium foreign brands. Declining commodity prices will support commodity imports, although the property market downturn will limit the extent.