By Ambar Warrick

-- China’s trade surplus grew sharply in February, data showed on Tuesday, driven largely by a smaller-than-expected decline in exports as manufacturing activity recovered on fewer COVID-19 disruptions, although the country’s imports also shrank far more than expected.

China’s trade balance rose to a record-high $116.88 billion in February, data from the Customs Administration showed, which was higher than expectations for a surplus of $81.80B, as well as January’s reading of $78.00B.

Exports shrank 6.8% from the prior year, better than expectations for a drop of 9.4% and last month’s reading of 9.9%. The reading indicated that the lifting of anti-COVID measures was helping local manufacturers meet international orders on time.

But manufacturers also have to contend with a potential slowdown in overseas demand for goods.

Local demand still showed few signs of improving from pandemic-era lows, with Chinese imports shrinking 10.2% from last year, nearly twice as much as expectations for a drop of 5.5%, and more than January’s drop of 7.5%.

Tuesday’s reading comes after data last week showed China’s business activity expanded at its fastest pace in over a decade in February, as a post-COVID recovery gathered steam.

Still, the government forecast a smaller-than-expected economic growth target for 2023, at 5%, likely driven by caution over a slowdown in the global economy.

But a robust trade surplus bodes well for the Chinese economy, and is likely to help in fishing growth from pandemic-era lows. Economic indicators released so far show that economic growth has certainly rebounded after the lifting of most zero-COVID restrictions earlier this year.

The Chinese government has also rolled out a slew of stimulus measures to support growth, and has indicated that it will continue doing so this year.

Focus this week is now on Chinese inflation data , which is also expected to show a recovery as the reopening spurred increased spending.