Extreme trade growth in China distorted by new year

China posted some extreme export and import growth numbers for February. The New Year distortion was likely the main reason behind.

In the near term, we expect positive growth contribution from net exports due to the currency and commodity price effects. In the long term, China's trade pattern is changing.

As expected China's export growth rebounded in February as a correction to the January reading and import growth fell further on weak commodity prices. 
Although direction was as expected, the magnitude was much larger. Exports grew by 48.3% y/y and imports fell by 20.5%, creating another record-high trade surplus of USD60.6bn. Markets expected +14.2% and -10%, respectively.

Nordea notes as follows on Monday:

• We strongly argue that these numbers should not be interpreted too literally because they are very likely distorted by the Chinese Lunar New Year. China's exports to all major markets have jumped while its imports from all major partners plummeted.
  
  
• We expect trade numbers to return to normal from March. In the coming months, exports may post some good news, benefiting from the CNY weakening vs the USD in recent months. 
  
  
• Imports are likely to continue contracting due to the commodity price effect. Therefore, net exports are expected to contribute positively to GDP growth in Q1 and Q2 this year.