Containers stacked at Lianyungang port, in China’s eastern Jiangsu province. China’s exports and imports returned to growth in April after contracting in the previous month, signalling an encouraging improvement in demand at home and overseas as Beijing navigates numerous challenges in an effort to shore up a shaky economy.
China’s exports and imports returned to growth in April after contracting in the previous month, signalling an encouraging improvement in demand at home and overseas as Beijing navigates numerous challenges in an effort to shore up a shaky economy. The data suggests a flurry of policy support measures over the past several months may be helping to stabilise fragile investor and consumer confidence, though analysts say the jury is still out on whether the trade bounce is sustainable. Shipments from China grew 1.5% year-on-year last month by value, customs data showed on Thursday, in line with the increase forecast in a Reuters poll of economists. They fell 7.5% in March, which marked the first contraction since November. Imports for April increased 8.4%, beating an expected 4.8% rise and reversing a 1.9% fall in March. “Export values returned to growth from contraction last month, but this was mainly due to a lower base for comparison,” said Huang Zichun, China economist at Capital Economics. “After accounting for changes in export prices and for seasonality, we estimate that export volumes remained broadly unchanged from March,” she added. In the first quarter, both imports and exports rose 1.5% year-on-year, buoyed by better-than-expected trade data over the January-February period. But the weak March figures prompted concerns that momentum could be faltering again. And a high statistical base seemed to have weighed heavily on last month’s brighter numbers, given that production had jumped in March 2023 as many workers recovered from a wave of Covid infections. “Exports have been the bright spot in China’s economy so far this year. The weak domestic demand led to deflationary pressure, which boosts China’s export competitiveness,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. Most China watchers say that Beijing has its work cut out as consumer inflation, producer prices and bank lending for March showed that the world’s No.2 economy has a soft underbelly. Moreover, a protracted property crisis remains a drag on overall confidence, spurring calls for more policy stimulus. Rating agency Fitch cut its outlook on China’s sovereign credit rating to negative last month, citing risks to public finances as growth slows and government debt rises. The Politburo of the Communist Party, the party’s top decision-making body, said last month it would step up support for the economy with prudent monetary policy and proactive fiscal policies, including through interest rates and bank reserve requirement ratios. Beijing has set an economic growth target for 2024 of around 5%, which many analysts say will be a challenge to achieve without much more stimulus. China stocks rose on Thursday off the back of the trade data, with the blue-chip CSI 300 index up 0.9% and Hong Kong’s Hang Seng Index 1.1% higher after the midday break. The headline import surge might not be all linked to domestic demand as shown by some stocking-up of goods by businesses. “So far this year, the Chinese yuan depreciated the least among all major Asian currencies, which backs the strong import figures,” said Wang Dan, chief economist at Hang Seng Bank China. “Also, Chinese producers are stocking up on raw materials before prices go up,” she added.
