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May 29, 2017

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China trade volumes creep up in April

BEIJING -- China's exports and imports rose marginally in April, official data showed Thursday, rebounding from sharp declines in March, but analysts saw a mixed outlook with the world's second-largest economy in the grip of a growth slowdown.

Exports crept up 0.9 percent year-on-year to US$188.54 billion, the General Administration of Customs announced, while imports increased 0.8 percent to US$170.09 billion, resulting in a surplus of US$18.45 billion.

The figures come a month after Customs reported that China's trade volumes fell dramatically in March, which analysts blamed on the continued impact of fake reporting of exports seen in early 2013.

Concerns over Chinese growth have increased this year after a series of weaker-than-expected statistics, though trade distortions have partially clouded the situation.

The country's gross domestic product (GDP) grew 7.4 percent in the first three months of 2014, weaker than the 7.7 percent in October-December last year and the worst since a similar 7.4 percent expansion in the third quarter of 2012.

In March imports slumped 11.3 percent year-on-year to US$162.4 billion while exports fell 6.6 percent to US$170.1 billion, for a trade surplus of US$7.7 billion.

China had recorded an unexpected trade deficit of almost US$23 billion in February, which authorities blamed on the Lunar New Year holiday season. That result was China's first monthly deficit in 11 months.

"China's trade data show signs of recovery but continue to understate the true health of the export sector," Julian Evans-Pritchard, China economist at Capital Economics in Singapore, wrote in a reaction to the April figures.

"April's low export growth was, as in previous months, largely caused by rampant over-invoicing of trade to avoid capital flows last year, which has created an artificially strong base for comparison," he added.

Slowing property activity suppressing commodity imports meant the outlook for import growth was "relatively weak," he said.

"China is likely to continue to post large trade surpluses this year."

Year-on-year price rises for new homes in China slowed in April for a fourth straight month, according to an independent survey released last week.

China's government has sought for more than three years to contain rising property values and increase the supply of affordable housing to stem discontent among ordinary citizens who cannot afford to buy.

Economist Zhang Zhiwei and colleagues at Nomura International maintained their view that growth is set to decrease further to 7.1 percent in the current quarter.

"The April trade data hold few surprises and we maintain our view of GDP growth slowing... as the property sector begins to correct," they wrote in a research note.

But Bank of America Merrill Lynch economist Lu Ting and colleagues called the year-on-year export growth "encouraging" and said it backed up their view that growth would accelerate slightly to 7.5 percent.

Growth in exports to the United States and the European Union in April far outpaced their performance in March, they added.

The trade figures come after diverse readings on Chinese manufacturing.

A private purchasing managers index (PMI) survey released Monday by British bank HSBC showed the sector contracted for a fourth consecutive month in April. In contrast, last week the government's official PMI remained in marginal expansion.

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