Trade stats point to another tentative reprieve

Exports surged 11.5 percent on year in March as imports moderated their decline to 7.6 percent (only 1.7 percent in RMB terms), giving China and the global economy another tentative reprieve from the doom and gloom of the opening weeks of 2016.

Some other headlines:

China's Economy Provides Brief Relief to Global Worries

China's jump in exports soothes growth fears, boosts markets

We can breathe a sigh of relief on China: Economist

Global Stocks Extend Gains as China Trade Improves, Metals Rise

The optimist view right now is that even despite some releveraging to kickstart growth, China's no longer propping up zombie firms and has instead shifted up the value chain. The pessimist or skeptic's view would be that too many defunct companies are still being kept on life support by more debt and the trade improvement was a blip caused by seasonal factors (like the unusually low base figures from March 2015) and especially a weak dollar (i.e. firming commodity input prices). My own take? As usual, some combination of both - subsequent months' data will show just how much of each is actually at play.

Japan could already be intervening to reverse the yen's rise as of this week on back of the improved Chinese data: if the yen manages to slide back to the 110 to 115 range and stay there over the remainder of this month, that would signal confidence in Tokyo that global dollar liquidity has been sufficiently salvaged from further unwarranted constriction, enabling it to get back on its own easing track. Likewise Europe: the euro should soon drop below $1.10 and settle as low as $1.07-1.08 in 2Q to get the Eurozone back on a stable footing of very low growth that will forestall further sinking into negative interest rate territory.

That the IMF has raised its growth forecast for China to 6.5 from 6.3 percent is significant; that it did so even as it downgraded (again) global growth from 3.4 to 3.2 percent is quite an endorsement of both Beijing's importance and its commitment to reform. While there's some great traction coming from India, given its considerably larger GDP and trade volume, it'd be even better news for China to get its act together again. And the main reason to be cautiously optimistic of this? The communist regime may have already cleared a dangerous hurdle to its stability, meaning we could finally see some cohesive policy implementation from the central government down to the provinces and localities, notably on SOE restructuring (and the attendant debt cleanup/deleveraging).