Economic pickup in sight after pandemic shock

China's foreign trade continued to fall in March, but the momentum of decline has greatly eased, indicating that the world's second-largest economy is gradually recovering from the fallout of the COVID-19 pandemic.

China's exports fell by 6.6 percent in March from a year ago, while imports dropped by a slight 0.9 percent in the same month, data from the General Administration of Customs showed on Tuesday.

That was better than expectations. Polls by Reuters showed that China's exports were expected to fall by 14 percent in March year-on-year, and its imports by 9.5 percent. Compared with the first two months of this year, when exports fell by 17.2 percent and imports by 4 percent, the March figures indeed indicate that the situation is improving, although the rebound still remains mild.

But since it is too early to conclude that there will not be further pandemic induced shocks ahead, the country must remain alert and take precautionary measures to ensure the economy can return to its normal growth track.

Nonetheless, China's foreign trade as a whole has proved to be quite resilient. Its imports have been exceptionally strong regardless of the impacts of the novel coronavirus, whose spread across the globe has seriously disrupted supply chains and normal trade activities. The stable growth of imports points to China's brisk domestic demand, which is helping to anchor the world economy.

Looking ahead, the prospects remain mixed. Work is resuming across the country and supportive policies are set to provide a boost to production, retail and foreign trade, but the continuing fight against the novel coronavirus in other parts of the world will reduce demand for Chinese exports.

While the situation in Europe remains uncertain, the rate of the novel coronavirus infections seems to be trending down in the United States, the country with the largest number of confirmed COVID-19 cases, which offers hope that it may be over the worst.

If the situation elsewhere improves in the coming weeks, Chinese foreign trade will benefit from reviving demand. But if the virus continues to rage, China's foreign trade recovery will be slowed.

That said, China's domestic demand has in recent years become a much stronger driving force for growth, and the country has been gradually easing its mobility restrictions and facilitating work resumption in the past weeks, as a result, its industrial activity is close to normal, as shown by coal consumption at power plants now at almost the same level as previous years, according to a report by the banking group UBS.

Domestic consumption has also picked up, and the authorities are implementing policies designed to boost consumer confidence and encourage consumption. As the effects of those policies unfolds, it is reasonable to anticipate that despite the shock of the novel coronavirus outbreak, the Chinese economy will reclaim a decent level of growth this year.