The export toughness was better than expected, and the import decline was higher than expected. In March, exports (in US dollars) increased by 14.7% year-on-year, higher than market expectations (12.8%), but the year-on-year growth rate showed signs of marginal weakness compared with January February (16.3%). In March, the year-on-year growth rate of imports (in US dollars) changed from positive to negative, from 15.5% from January to February to - 0.1%, significantly lower than the market expectation (8.4%). Affected by the deviation of import and export growth, the trade balance reached US $47.38 billion in March, significantly higher than the market expectation (US $21.7 billion).
The structural resilience of exports is still being tested. Manufacturing remained below the boom line of 49.5% in developed markets (PMI remained below the boom line in May), while manufacturing remained below the boom line of 49.5%. The economic recovery in developed markets remains the main driving force for China's exports, while the slowdown in production in emerging markets, as competitors, is good for China's short-term export performance to a certain extent. However, in the long run, the peak recovery in developed markets, the weakening demand and increasing competitive pressure caused by the recovery of production in emerging markets have a negative impact on China's exports, and the resilience of China's exports is facing a test.
The sluggish production led to the deviation of imports from expectations, and the closure of the epidemic may further drag down short-term imports. As we pointed out in "comments on China's macro data in March - the bottom of the economic cycle, the rebound peak of the epidemic, and the obvious contraction of manufacturing and service industries", the pressure on manufacturing inventories pulled down production, leading to the further decline of the purchase volume index and import index. We believe that this led to the deviation of imports from expectations in March. At present, the closure and control of the epidemic has led to the reduction of import and export logistics efficiency in the "Yangtze River Delta" and "Pearl River Delta", which may further weaken the willingness of enterprises to purchase, which we believe will drag down short-term imports. However, in the long run, we expect that the structural demand gap driven by the policy of "expanding domestic demand" this year will support the continuous growth of imports of raw materials and equipment.
China's exports to major destinations maintained rapid growth, and the growth rate was differentiated. In March, in terms of year-on-year growth, China's exports to the United States (22.4%), the European Union (21.4%) and South America (20.8%) maintained a high growth rate, while its exports to South Korea (14.4%), ASEAN (10.4%) and Japan (9.7%) maintained a rapid growth. Compared with January February, the marginal growth rate of China's exports to South Korea (- 3.6 percentage points), ASEAN (- 2.9 percentage points) and EU (- 2.5 percentage points) slowed down, and the marginal growth rate of China's exports to the United States (+ 8.7 percentage points), Japan (+ 2.3 percentage points) and South America (+ 0.5 percentage points) accelerated. We expect that as the expansion trend of PMI in major destinations slows down and the recovery momentum weakens, the growth rate of China's exports to major destinations will fall, especially considering the negative impact of the Russian Ukrainian conflict on the European economy, we expect this situation to lead to a further decline in China's exports to the EU.
The growth rate of mobile phone exports accelerated, the growth rate of exports of major consumer goods improved, and the marginal growth rate of exports of high-tech products slowed down. In March, the growth rate of mobile phone export was 14.1%, up 12.9 percentage points from January to February, and the export volume reached US $12.45 billion. In March, the export volume of major consumer goods (clothing, footwear, furniture and toys) was US $21.87 billion, with a year-on-year growth rate of 12.1%, up 3.0 percentage points from January to February. In terms of year-on-year growth rate, the export of furniture, footwear and clothing increased by 5.3, 4.9 and 4.6 percentage points respectively compared with January February, and the export of toys decreased by 7.6 percentage points compared with January February. In March, the export volume of high-tech products was US $83.1 billion, a year-on-year increase of 9.6%, down 5.0 percentage points from January to February.
The global epidemic eased and the export of epidemic prevention materials fell sharply. In March 2022, the global epidemic eased, and the number of newly confirmed cases in a single week gradually decreased from the historical peak in January (23.286 million). Affected by this, the export volume of China's epidemic prevention materials fell sharply in March: the export of textile products used to manufacture masks reached US $11.83 billion, a decrease of 28.8% compared with January; The export of medical instruments and devices was US $1.56 billion, a decrease of 13.2% compared with January. At present, overseas epidemic control measures have been gradually relaxed, but the number of newly confirmed cases has not rebounded: in early April, the number of newly confirmed cases in a single week has dropped to 7.309 million. We expect that the demand for epidemic prevention materials will continue to fall and drive China's export of epidemic prevention materials back to the normal range.
From the perspective of import structure, the import of bulk commodities and industrial equipment fell as a whole. In terms of year-on-year growth, in March, the import volume of coal (- 39.9%), iron ore (- 14.5%) and crude oil (- 14.0%) maintained negative growth, with the decline rate expanding by 26.0%, 14.3% and 9.1% respectively compared with that from January to February; The year-on-year growth rate of copper ore imports decreased from 9.9% from January to February to 0.6% in March. In March, the import volume of machine tools decreased by 5.9% year-on-year, 8.1 percentage points higher than that from January to February; The import volume of integrated circuits decreased by 17.9% year-on-year, 13.3 percentage points higher than that from January to February.
