We don't think it has to be that complicated, however. One quick way to adjust for the erratic data each January and February is to simply take a two month moving sum of the data and then calculate the YoY % change. This method smooths out the noise so we can more easily determine the signal. What we find is that import growth is still robust and that the decline in exports is much less than the February data suggests. So doing away with hyperbole, it seems that Chinese demand on the surface seems ok (and maybe the Chinese economy is actually rebalancing a bit), but that exports, in showing their first YoY decline since 2009, are painting a darker picture of global demand. A more cynical take on the strong imports would assume the data simply means foreign subsidiaries of Chinese companies are over-invoicing the parent company as a means to get capital out of China. Perhaps this is happening on the margin, but for now we'll go with the optimistic story and believe that China is, finally, starting to rebalance.
