China's import and export growth in January and February exceeded expectations, giving officials hope that global trade is improving amid sluggish economic recovery.

A boom in semiconductor demand has boosted Asian economies, leading to improved export statistics from China, South Korea, Germany, and Taiwan over the first two months of the year.

Export and Import Growth of China

According to customs data released on Thursday, exports from China in the two months were 7.1% higher than a year before. This result beat the Reuters poll, which expected a rise of 1.9%. Imports by the world's second-biggest economy were also up 3.5%, compared with the poll's forecast for growth of 1.5%.

Xu Tianchen, senior economist at the Economist Intelligence Unit, told Reuters: "The better-than-forecast data echoes a recovery in global trade driven by the electronics sector, but also benefits from a low base effect, as export growth in January-February 2023 was -6.8%."

The customs department has provided combined trade statistics from January and February to eliminate distortions caused by the shifting timing of the Lunar New Year.

Earlier this week, Premier Li Qiang of China pledged to change the country's development model, which depends heavily on exporting finished goods and industrial overcapacity. Li also announced a 5% economic growth target for 2024, similar to last year.

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Economic Hurdles of China

Over the last year, policymakers have faced several challenges, including a housing crisis, a slowdown in consumer spending, the divestment of foreign enterprises, manufacturers facing buyer difficulties, and local governments dealing with massive debt loads. 

Sustained improvement in exports on a long-term basis would convince them that the crucial growth engine will help boost the economy. Some economists said Chinese manufacturers slashing prices to secure orders may have contributed to the recent export gains.

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