China’s exports in March 2023 showed an unexpected surge, recording a 14.8% increase from the previous year.

This came as a surprise to economists who predicted a 7.0% fall in a Reuters poll, and it put an end to five consecutive months of declines.

The rise in exports was attributed to the increasing demand for electric vehicles, solar products, and lithium batteries, according to Lv Daliang, spokesperson of the General Administration of Customs.

However, some analysts caution that the improvement may partly reflect suppliers catching up with unfulfilled orders after last year’s COVID-19 disruptions.

They also warn that the global demand outlook remains subdued, and the strong export growth may not be sustained given the weak global macro outlook.

Zhiwei Zhang, the chief economist at Pinpoint Asset Management, believes that the wave of COVID outbreaks in December and January depleted factories’ inventories.

Now that factories are running at full capacity, they are catching up on the cumulated orders from the past. He adds that the strong export growth is unlikely to sustain given the weak global macro outlook.

The rise in imports was less than expected, with imports falling only 1.4%, smaller than the 5.0% decline forecast and a 10.2% contraction in the previous two months.

Economists point to an acceleration in the purchase of agricultural products, especially soybeans, as providing some support.

However, despite the surge in China’s exports, doubts persist on whether this can be sustained, especially in comparison to other Asian exporters like South Korea and Vietnam, which have both seen exports decline in the first few months of 2023.

Capital Economics analysts said in a note that they are not convinced that this rebound will be sustained given the still gloomy outlook for foreign demand.

They expect most developed economies to slip into recession this year and believe that the downturn in Chinese exports still has some way to run before it reaches a bottom later this year.

China’s newly appointed Premier, Li Qiang, has urged officials to “try every method” to grow trade with developed economies and push companies to further explore emerging market economies such as those in Southeast Asia.

Beijing has set a growth target of around 5% for the gross domestic product (GDP) this year after severe pandemic controls last year knocked the economy to one of its slowest rates in decades. GDP rose only 3% last year.

In conclusion, the unexpected surge in China’s exports in March 2023 has been linked to the rising demand for electric vehicles, solar products, and lithium batteries.

However, there are doubts about whether this surge can be sustained given the weak global macro outlook and the decline in exports of other Asian countries.

Nevertheless, Beijing is taking steps to grow trade with developed economies and explore emerging market economies to meet its growth target for GDP.