China data to show exports, bank lending rising in March

BEIJING (Reuters) - China’s exports likely returned to growth for the first time in nine months in March while the pace of bank lending may have picked up, adding to signs that the world’s second-largest economy may be stabilizing.

A worker walks between shipping containers at a port in Tokyo, Japan, February 18, 2016. REUTERS/Thomas Peter

Chinese leaders have pledged to make monetary policy more flexible this year even as it leans more on increased fiscal spending and tax cuts to support economic growth and cushion the pain from structural reforms.

Exports likely grew 2.5 percent in March from a year earlier, after tumbling 25.4 percent in February - the worst showing since May 2009, while imports likely dropped 10.2 percent, following a 13.8 percent dip in February, a Reuters poll showed.

That would produce a trade surplus of $30.85 billion for March, compared with a $32.59 billion surplus in February and a record surplus of $63.3 billion in January.

Commerce Minister Gao Hucheng said last month that China’s foreign trade may show a big rebound in March after falling in the first two months of the year. Top officials have said the economy was showing signs of improvement while capital outflows were easing.

China’s factory activity unexpectedly expanded in March for the first time in nine months, an official survey showed, raising hopes that the downward pressure on the economy is easing due to a property-led investment rebound.

“We believe growth stabilized at a weak level in late Q1 and is set to recover mildly when China’s accommodative policy gradually feeds through to real activity,” Standard Chartered analysts wrote in a report.

Consumer price inflation likely quickened to 2.5 percent

in March, the highest since May 2014, from February’s 2.3 percent, according to the poll of 40 economists.

Producer prices are forecast to have fallen 4.6 percent in March from a year earlier, marking the 49th consecutive month of decline, moderating from a 4.9 percent drop in February but showing persistent deflationary pressures, the poll showed.

While the food-driven consumer price increase is likely to be welcomed by policymakers worried that China could fall into a deflationary trap, some economists expect upward price pressures in the months ahead to be modest.

China aims to keep consumer inflation at around 3 percent in 2016 to reflect factors such as rising labor costs, price fluctuations of agricultural products and the impact of further price reforms.

Banks may have doled out 1.05 trillion yuan ($162.15 billion) of new loans in March, the poll showed, up from February’s 726.6 billion yuan but off a record of 2.51 trillion yuan in January.

Last week, China’s “Big Four” state-owned banks warned they were bracing for slower economic growth this year, after they cut dividends and reported near-flat or falling quarterly profits.

Growth in the broad M2 money supply is predicted to

have quickened to 13.5 percent in March from February’s 13.3 percent.

China’s foreign exchange reserves - the world’s largest- likely dropped to $3.18 trillion at the end of March from $3.2 trillion at the end of February, implying a decline of about $20 billion in March.

The reserves fell by $28.57 billion in February, easing from a $99.5 billion drop in January and $107.9 billion in December, the biggest monthly drop on record.

Recent data showed a slowdown in capital outflows from China as the yuan CNY=CFXS stabilizes, partly to the dollar's broad retreat as expectations cool on the pace of U.S. interest rate rises, but a policy adviser to China's central bank has warned that the yuan may come under renewed pressure.

China is due to release data on foreign exchange reserves on Thursday, inflation data on April 11, followed by trade data on April 13. Bank lending and money supply data will be released any time between March 10 and 15.

GDP and activity data will be released on April 15.

The government aims for annual economic growth between 6.5 percent 7 percent this year.

The economy grew 6.9 percent in 2015, the weakest pace in a quarter of a century. Some analysts believe that real growth is even lower.

Reporting by Kevin Yao and Shaloo Shrivastava; Editing by Sam Holmes