China’s trade slows; bonds bought

China’s export boom lost speed in March, even as investors piled into Chinese government bonds as a shelter from the global energy shock. (cnbc.com) (usnews.com) China’s exports rose 2.5% from a year earlier in March, down from a combined 21.8% jump in January and February and below the 8.6% growth economists polled by Reuters expected. Imports climbed 27.8%, the fastest increase since November 2021 and far above the 11.2% forecast. (cnbc.com) (english.customs.gov.cn) The March figures put total goods trade at $590.9 billion, with exports of $321.0 billion and imports of $269.9 billion. China’s first-quarter trade surplus reached about $264.3 billion, down 3% from a year earlier as higher import values ate into the gap. (english.customs.gov.cn) (cnbc.com) Customs vice minister Wang Jun said on April 14 that oil prices had seen “fierce fluctuation” and the trade environment had turned “complex and severe.” CNBC reported that the Iran war pushed up energy costs and clouded the outlook for global demand. (english.scio.gov.cn) (cnbc.com) The bond market is telling a different story. Reuters reported that foreign investors put $2.5 billion into Chinese debt in March while other emerging markets lost $16.7 billion, according to Institute of International Finance data. (usnews.com) Investors are betting China can absorb higher oil prices without raising interest rates. Reuters said one-year Chinese government bond yields fell to a 15-month low, while short-term yields in the United States, Europe and Australia rose on fears that energy-driven inflation would force central banks to tighten. (usnews.com) China entered this shock with weaker consumer demand and lower inflation than many other big economies. Reuters said traders also pointed to state oil reserves, a power system anchored by coal and renewables, and price controls that can soften the pass-through from crude prices to households and factories. (usnews.com) (cnbc.com) China’s exporters still face a harder test if the energy shock lasts. Pinpoint Asset Management economist Zhiwei Zhang told CNBC that weaker global demand likely hurt March exports, while Reuters quoted Wish Fund chief investment officer Lin Sheng saying prolonged high oil prices would still push China’s inflation higher. (cnbc.com) (usnews.com) For now, the split is stark: trade data show higher costs and supply disruption hitting the factory economy, while bond buyers are treating China as one of the few big markets that may not need to fight the oil shock with rate hikes. (cnbc.com) (usnews.com)