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China’s exports in surprise jump in April, but imports tumble
China’s exports returned to growth in April, beating forecasts and suggesting that an expected demand shock from coronavirus containment efforts around the world will come further down the line.
April exports rose by 3.5 per cent from a year earlier, reversing the 6.6 per cent fall in March and much better than the combined minus 17.2 per cent collapse in January and February. April’s return was much better than the expectations of a Bloomberg poll of analysts, which had predicted an 11 per cent shrinkage from a year ago.
But imports fell by 14.2 per cent from a year earlier, worse than Bloomberg’s poll, the median forecast of which was minus 10 per cent. April’s imports were also well below March’s reading of minus 0.9 per cent, and January-February’s minus 4 per cent.
That means China’s trade balance was US$45.34 billion in April, up from US$19.9 billion in March.
The surprise export growth was out of kilter with various data points and surveys over recent weeks, including last week’s official purchasing managers’ index (PMI), which showed sentiment about new export orders were deep in the doldrums. The private Caixin / Markit PMI, also released last week, showed that export orders fell at the sharpest rate since the global financial crisis began in 2008.
From January to April, exports have fallen in total by 9 per cent, while imports have contracted 5.9 per cent.
There is some suggestion that part of the growth is down to exports of personal protective equipment used around the world to fight coronavirus, however in both volume and value terms this is considered too small of a sector to have materially powered the Chinese economy.
Over the course of the first four months of the year in yuan terms, shipments of “masks and other textiles” rose by 5.9 per cent. In yuan terms over the same period, electronics shipments fell by 5.9 per cent, garments were down 20 per cent and furniture dropped 15.7 per cent.
Louis Kuijs, China economist at Oxford Economics, said the April export recovery “could not last”.
"As heralded by the weakness of new export orders in the PMIs, exports should weaken significantly in the near term"
“China's external demand is suffering from the impact of lockdowns and social distancing in the rest of the world. But April shipments may have been boosted by exporters making up for shortfalls in the first quarter due to supply constraints then. In any case, as heralded by the weakness of new export orders in the PMIs, exports should weaken significantly in the near term,” Kuijs said.
The numbers, released on Thursday by the General Administration of Customs, also jar with overseas data, which show economies shrinking and consumption contracting while lockdowns persist.
Releases from around the world this week showed the hammering economies are taking because of the virus.
Various parts of the European Union have started to reopen slowly, but their economies have plumbed depths that were previously unthinkable. The Eurozone composite PMI combining both manufacturing and services plunged to an all-time low of 13.6 in April, with a number under 50 signifying contraction in the sector. Business activity, order books and employment all hit record lows.
By way of comparison, even at its lowest ebb in February, China’s composite PMI was only at 28.9.
American trade data this week showed that exports to China fell 14.7 per cent in the first quarter compared to a year earlier. This suggested that while Beijing has been increasing its purchases of things like soybeans in recent weeks, it is not close to fulfilling the terms of the
phase one trade deal.
In March alone, US exports to China fell by 18 per cent on March 2017. To meet the terms of the trade deal, China must meet 2017’s level of purchases, plus an additional US$200 billion over two years. US President Donald Trump has in recent days threatened more tariffs on China, or even to tear up the phase one trade deal itself, should China fall short of its purchase agreements.
The fall in China’s imports suggests that domestic demand remains weak. Some reports have suggested that China’s unemployment is running at 20 per cent, with many migrant workers having lost their jobs because of the coronavirus outbreak.
Furthermore, the expected bounce from “revenge spending”, where people go on a shopping spree after being unable to buy things for a sustained period, has not materialised in any large extent. Low consumption is hampering the recovery, shown in stubbornly low retail sales in March, when they fell by 15.8 per cent.
Analysts have warned that the psychological affects of coronavirus on consumer spending
may loom much longer than the virus itself.
China’s efforts to reopen is also proving to be slower than expected. While most businesses and factories have by this stage restarted, few are running close to full capacity.
The average coal consumption across six major power plants was down 5.4 per cent in the week to May 1, compared to a year earlier. While this may be cheered by environmentalists, it can also be read as a sign that the economy is not moving at full speed.
There were 55.6 per cent fewer passenger trips on China’s railways, roads, waterways and planes in the week through May 2 than a year earlier, while the seven-day average of metro passenger trips in Shanghai on May 3 was down almost 40 per cent from a year earlier.
Economists often look at these passenger metrics to distinguish between performances of different trade sectors. Inter-city travel – such as the road and rail trips – are viewed as indicators of trade in goods, while the urban metro trips are viewed as a decent gauge of trade in services.
- China’s exports grew by 3.5 per cent in April and imports fell by 14.2 per cent, presenting a mixed picture of the economic recovery
- Demand shock from coronavirus containment efforts around the world did not appear to place great strain on world’s second largest economy in April
China’s exports returned to growth in April, beating forecasts and suggesting that an expected demand shock from coronavirus containment efforts around the world will come further down the line.
April exports rose by 3.5 per cent from a year earlier, reversing the 6.6 per cent fall in March and much better than the combined minus 17.2 per cent collapse in January and February. April’s return was much better than the expectations of a Bloomberg poll of analysts, which had predicted an 11 per cent shrinkage from a year ago.
But imports fell by 14.2 per cent from a year earlier, worse than Bloomberg’s poll, the median forecast of which was minus 10 per cent. April’s imports were also well below March’s reading of minus 0.9 per cent, and January-February’s minus 4 per cent.
That means China’s trade balance was US$45.34 billion in April, up from US$19.9 billion in March.
The surprise export growth was out of kilter with various data points and surveys over recent weeks, including last week’s official purchasing managers’ index (PMI), which showed sentiment about new export orders were deep in the doldrums. The private Caixin / Markit PMI, also released last week, showed that export orders fell at the sharpest rate since the global financial crisis began in 2008.
From January to April, exports have fallen in total by 9 per cent, while imports have contracted 5.9 per cent.
There is some suggestion that part of the growth is down to exports of personal protective equipment used around the world to fight coronavirus, however in both volume and value terms this is considered too small of a sector to have materially powered the Chinese economy.
Over the course of the first four months of the year in yuan terms, shipments of “masks and other textiles” rose by 5.9 per cent. In yuan terms over the same period, electronics shipments fell by 5.9 per cent, garments were down 20 per cent and furniture dropped 15.7 per cent.
Louis Kuijs, China economist at Oxford Economics, said the April export recovery “could not last”.
"As heralded by the weakness of new export orders in the PMIs, exports should weaken significantly in the near term"
“China's external demand is suffering from the impact of lockdowns and social distancing in the rest of the world. But April shipments may have been boosted by exporters making up for shortfalls in the first quarter due to supply constraints then. In any case, as heralded by the weakness of new export orders in the PMIs, exports should weaken significantly in the near term,” Kuijs said.
The numbers, released on Thursday by the General Administration of Customs, also jar with overseas data, which show economies shrinking and consumption contracting while lockdowns persist.
Releases from around the world this week showed the hammering economies are taking because of the virus.
Various parts of the European Union have started to reopen slowly, but their economies have plumbed depths that were previously unthinkable. The Eurozone composite PMI combining both manufacturing and services plunged to an all-time low of 13.6 in April, with a number under 50 signifying contraction in the sector. Business activity, order books and employment all hit record lows.
By way of comparison, even at its lowest ebb in February, China’s composite PMI was only at 28.9.
American trade data this week showed that exports to China fell 14.7 per cent in the first quarter compared to a year earlier. This suggested that while Beijing has been increasing its purchases of things like soybeans in recent weeks, it is not close to fulfilling the terms of the
phase one trade deal.
In March alone, US exports to China fell by 18 per cent on March 2017. To meet the terms of the trade deal, China must meet 2017’s level of purchases, plus an additional US$200 billion over two years. US President Donald Trump has in recent days threatened more tariffs on China, or even to tear up the phase one trade deal itself, should China fall short of its purchase agreements.
The fall in China’s imports suggests that domestic demand remains weak. Some reports have suggested that China’s unemployment is running at 20 per cent, with many migrant workers having lost their jobs because of the coronavirus outbreak.
Furthermore, the expected bounce from “revenge spending”, where people go on a shopping spree after being unable to buy things for a sustained period, has not materialised in any large extent. Low consumption is hampering the recovery, shown in stubbornly low retail sales in March, when they fell by 15.8 per cent.
Analysts have warned that the psychological affects of coronavirus on consumer spending
may loom much longer than the virus itself.
China’s efforts to reopen is also proving to be slower than expected. While most businesses and factories have by this stage restarted, few are running close to full capacity.
The average coal consumption across six major power plants was down 5.4 per cent in the week to May 1, compared to a year earlier. While this may be cheered by environmentalists, it can also be read as a sign that the economy is not moving at full speed.
There were 55.6 per cent fewer passenger trips on China’s railways, roads, waterways and planes in the week through May 2 than a year earlier, while the seven-day average of metro passenger trips in Shanghai on May 3 was down almost 40 per cent from a year earlier.
Economists often look at these passenger metrics to distinguish between performances of different trade sectors. Inter-city travel – such as the road and rail trips – are viewed as indicators of trade in goods, while the urban metro trips are viewed as a decent gauge of trade in services.
