March trade data out of China suggests the nation may be undergoing an economic shift. China posted a slight trade deficit of $884 million in March, signaling stronger domestic demand. Imports grew by 14.1 percent year-over-year, while exports increased by 10 percent for the same period, according to China’s Customs Administration.
Data released on Wednesday showed import growth far in excess of the 5.2 percent expected, while exports fell just short of the 10.5 percent rise forecast in the benchmark Reuters poll, according to the Reuters news agency. China had a trade surplus of $15.3 billion in February.
In recent years, China has relied heavily on its exports and investment spending to maintain a strong pace of growth. However, as economic growth in its key markets such as the US and Europe has slowed, exports have weakened.
In the longer term, Beijing has said it wants to increase domestic demand and boost imports to reduce its dependence on exports and achieve more sustainable growth.
Haibin Zhu, chief China economist at JP Morgan in Hong Kong, told Reuters the surge in imports in March could help dispel a major concern over the strength of the domestic demand cycle prompted by weakness of import data in previous months.
"The stronger than expected import growth for March suggests this cycle is probably coming to a turning point," said Zhu. "If domestic demand turns out to be stronger than expected, it's definitely positive for the economic outlook."
However, some analysts tempered the enthusiasm, saying trade data for China is unpredictable at the beginning of the year because of the Lunar New Year holiday when many factories shut down.
