China trade surges: China's trade performance in January and February surpassed expectations, indicating a potential rebound in global trade. According to customs data released on Thursday, China's exports during the two-month period were up by 7.1 per cent compared to the previous year, exceeding the forecasted increase of 1.9 per cent. Similarly, imports rose by 3.5 per cent, surpassing the anticipated growth of 1.5 per cent.

This positive momentum follows a previous uptick in December, driven by increased consumer demand overseas for products like semiconductors and electronics. The customs agency's practice of releasing combined January and February trade data helps mitigate distortions caused by the shifting timing of the Lunar New Year, which fell in February this year.

Development model overhaul

Chinese Premier Li Keqiang recently unveiled an economic growth target of approximately 5 per cent for 2024 and pledged to overhaul the country's development model. This model has heavily relied on exporting finished goods and managing industrial overcapacity.

China has faced challenges including a property crisis, restrained consumer spending, divestment by foreign firms, difficulties for manufacturers in finding buyers, and the burden of local government debt. While policymakers have implemented measures to support growth since June, the impact has been modest. Concerns persist about the limited fiscal capacity of Beijing, particularly following Li's address at the annual meeting of the National People's Congress, which failed to boost investor confidence.

Analysts warn of a potential trajectory towards stagnation reminiscent of Japan's experience unless China's economy undergoes major reorientation towards household consumption and market-driven resource allocation.

The trade surplus for China widened to $125.16 billion, surpassing the forecasted $103.7 billion and the previous month's $75.3 billion.

(With Reuters Inputs)