China’s overseas shipments last month jumped the most in two years as global demand held up. Imports moderated after a holiday-season surge in February and the trade balance rose.

Exports rose 16.4% in dollar terms, reversing a 1.3% drop a month earlier, the customs administration said Thursday. Imports increased 20.3%, pulling back after soaring 38.1% the prior month, to leave a trade surplus of $23.93 billion. In yuan terms, exports rose 22.3% while imports increased 26.3%.

The pace of trade expansion is likely to slow in the second quarter, a spokesman for the General Administration of Customs said at a briefing. Trade remained "sound and steady" in the first quarter, but the data don’t show the full picture for 2017, officials said in a statement released with the data.

"The March number is much better compared to previous months because the first two months are often distorted" by the week-long Lunar New Year holiday, said Wang Qiufeng, an analyst at China Chengxin International Credit Rating in Beijing. "The coming quarters won’t be as strong as the first quarter, especially on the imports front, the prices of commodities won’t continue rising, which may drag down on the imports growth," she said.

Private-sector trade surged 22.5% to 2.28 trillion yuan in the first quarter to account for 36.8% of the nation’s total, according to customs. That growth was 0.2 percentage point higher than the same period last year.

Demand for Chinese products has proved resilient this year as the global expansion holds up. Simmering tensions with the country’s largest trading partner also appear to be easing after U.S. President Donald Trump and Chinese counterpart Xi Jinping tried to find common ground on trade last week at their first meeting, and Trump told the Wall Street Journal Wednesday he won’t brand China a currency manipulator, a reversal of his campaign pledges.

Trump also said he has offered Xi better trade terms for Beijing in exchange for help on deal with North Korea, the paper reported. China is willing to work with the U.S. to handle friction and discuss trade, customs spokesman Huang Songping said at the briefing on Thursday.

China’s trade balance with the U.S. rebounded from a three year low in February, climbing to $17.7 billion last month. Trade with America climbed 18.2% from a year earlier.

China, whose crude imports in March surged to a record, topped the U.S. as the world’s biggest overseas buyer in the first quarter. Iron ore imports were near a monthly record.

In the first quarter, exports rose 14.8% in yuan terms. Imports increased 31.1% to leave a trade surplus of 454.94 billion yuan (US$66 billion).

The first quarter data suggest "China has finally caught up with the rest of Asia with the end of the trade recession," said Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. "Given the meeting and phone call between Xi and Trump, the risk of a trade war has diminished substantially."

World trade expanded at the fastest pace in six years in the first quarter, according to Oxford Economics Ltd. "But there are still reasons for caution," Lead Economist Adam Slater wrote in a recent note. "Although the ‘cyclical’ element in world trade is improving, the ‘trend’ element is not thanks to changes in supply chains and a lack of trade liberalization."

Geopolitical Risks Loom

Still, the world’s largest exporter faces more challenges and uncertainties this year as geopolitical risks loom. Trump said on Twitter this week that China would get a better trade deal with the U.S. "if they solve the North Korean problem."

Treasury Secretary Steven Mnuchin said after a summit last week in Florida between Xi and Trump that the U.S. aims to increase its exports to China. Commerce Secretary Wilbur Ross added that China showed interest in reducing their net trade balance because of its impact on the money supply and inflation.

Elsewhere Thursday, Commerce Ministry Spokesman Sun Jiwen said China is willing to increase imports from the U.S. based on "actual market demand." China never seeks to have a trade surplus, and the trade imbalance between the nations is a result of different economic structures, industry competitiveness and roles in the global supply chain, he said. Sun also urged the U.S. to ease export restrictions on China to help reduce the trade deficit.

By Bloomberg News