BEIJING – China saw a mild trade deficit of $884 million in March as a forecast-busting 14.1 percent year on year surge in imports eclipsed export growth of 10 percent, signaling that domestic demand was gathering the steam needed to drive economic recovery.
Customs Administration data on Wednesday showed import growth far in excess of the 5.2 percent expected, while exports fell just short of the 10.5 percent rise forecast in the benchmark Reuters poll.
That left China with a trade deficit, compared with a forecast surplus of $15.4 billion and February's surplus of $15.3 billion.
"Import growth has been much weaker in the past several months compared to exports. One major concern is import weakness is relative to the weakness in domestic demand, so the stronger than expected import growth for March suggest this cycle is probably coming to a turning point," Haibin Zhu, chief China economist at JP Morgan in Hong Kong, told Reuters.
"If domestic demand turns out to be stronger than expected, it's definitely positive for the economic outlook."
China's exports soared past forecasts to jump by a fifth in February while imports fell a sharper than expected 15.2 percent, though the numbers were likely highly skewed by the long Lunar New Year holiday, which fell in February this year and in January last year.
Analysts said it would be hard for China to maintain export growth in coming months at the pace seen in January and February, even if the recovering global economy continues to bolster demand for goods from Chinese factories -- the world's most prolific exporters.
On the internal front, the accelerating restocking process in some industries and a favorable base effect from a year ago may have flattered March imports, which otherwise remain constrained by falling global commodity prices and a slower-than-expected upturn in investment demand, analysts said.
China's Commerce Ministry has pledged to unveil fresh measures this year to boost imports, chiming with Beijing's long-term goal of balancing its trade structure to pursue more sustainable growth by tilting the economy more towards domestic consumption.
A pair of surveys last week showed that stronger domestic demand helped China's factory activity to rebound in March, with new orders up sharply in a sign that the underlying economic recovery is strong enough to weather any risks from patchy external environment.
Beijing set an annual growth target of 8 percent for combined imports and exports in 2013.
China's economy has snapped out of a seven-quarter long slowdown and began to pick up from the last quarter of 2012 as the economy regains internal strength.
Annual economic growth slowed to 7.8 percent last year, the weakest showing since 1999. China's net exports subtracted 2.2 percent from 2012 GDP growth.
(Reporting by China Economics Team; Writing by Nick Edwards; Editing by Eric Meijer)