Strong import growth

China's strong import growth in March is a clear reflection of its stable domestic demand and continued economic recovery, which is especially comforting given the cloudy international scenario.

Official data show that imports increased by a surprising 14.1 percent in March, which shows the country has kept its word that it would expand imports to help rebalance the world economy. The growth is well above market forecasts and much higher than that for the first two months combined, which was 5 percent.

Raw materials have been the main driver of the exceptional growth in imports, indicating that the domestic economy is on the track of recovery.

Last year, China's economic growth slowed and registered a 7.8 percent year-on-year GDP growth, the slowest pace since 1999. However, it started to bottom out in the last quarter of 2012 and the latest data show the upward trend has been solid so far. Such a trend is also shown by other indicators, such as the purchasing managers' index, which rose from 50.1 in February to 50.9 in March.

A number of international organizations and investment banks have adjusted their forecasts for China's GDP growth this year, with the highest being 8.6 percent.

China is clearly going to be a major contributor to the growth of the global economy this year, especially as the developed economies are still suffering from many uncertainties.

However, the big gap between the March figure and that of the previous two months shows some of the imports in March could have been contributed by seasonal factors. For example, economic activities generally pick up and enterprises tend to import more after the Spring Festival holiday, which was in February this year.

The rising value of the renminbi may have also prompted importers to increase imports since the cost of goods becomes less as the currency appreciates.

So while China's continued recovery and expanding imports will help anchor the global economy, it will be difficult for the country to carry March's strong import growth momentum into the coming months.

(China Daily 04/11/2013 page8)