A recovering US economy and the coronavirus crisis in India helped boost China’s trade data in April, but volumes are “probably close to a cyclical peak”, analysts said.
Exports grew by 32.3 per cent last month from a year earlier to US$263.93 billion, up from the 30.6 per cent growth seen in March, data released by the National Bureau of Statistics on Friday showed. This was above the median result of a survey of analysts conducted by Bloomberg, which predicted 24.5 per cent growth.
This was the 10th consecutive period of export growth, although the fact that exports grew by just 3.5 per cent in April last year due to the impact of the coronavirus is a factor in the size of the increase this year.
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Imports grew by 43.1 per cent in April from a year earlier to US$221.07 billion, up from the 38.1 per cent growth in March, and just below the Bloomberg survey, which predicted 44.4 per cent growth.
This was the seventh consecutive period of import growth but, again, the import drop of 14.2 per cent in April last year means the latest figures started from a low base.
China’s total trade surplus stood at US$42.85 billion in April, compared with US$13.8 billion in March.
“China’s export growth again surprised on the upside. Two factors likely contributed to the strong export growth. First, the US economy is booming, boosting global demand. Secondly, the Covid crisis in India caused delays in production, therefore some orders were shifted to China,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
“We expect that China’s export growth will stay strong into the second half of this year, as the two factors will likely continue to favour Chinese manufacturers. Exports will be a key pillar for growth in China this year. It also helps the yuan to perform well among emerging market currencies.”
India’s total coronavirus infections have exceeded 21 million, of which about 7 million have been added since mid-April.
And analysts at the Huatai Securities said that there were rising risks that the massive surge of cases in India might spread to Southeast Asian countries, which then would pose a great threat to the production and economic recovery in the region.
“But for China, this may mean that the country’s share in global trade is likely to continue rising in a month-on-month manner and export growth is more sustainable,” they said on Friday.
According to Lu Ting, chief China economist at Nomura, the growth of China’s exports to India surged by 144 per cent year on year in April.
“The stimulus in developed economies, especially the US, sustained demand for products manufactured in China, while the worsening Covid-19 pandemic in many emerging markets, including India and the Asean, have also benefited China’s exports in two ways: it has made those emerging markets countries less competitive against China, and, in some cases, these emerging markets have had to rely on China for personal protective equipment and other products to combat Covid-19,” said Lu.
Headline trade growth picked up last month thanks to favourable base effects. But in seasonally adjusted terms, exports continued to level off, and the rebound in imports stalled
But Julian Evans-Pritchard, senior China economist at Capital Economics, highlighted that China’s exports continued to level off and the rebound in imports stalled last month in seasonally adjusted terms, partly showing supply constraints, which were most visible in the electronic sector.
“Headline trade growth picked up last month thanks to favourable base effects. But in seasonally adjusted terms, exports continued to level off, and the rebound in imports stalled. This partly reflects supply constraints, which are most visible in the electronics sector. But we think that demand is probably close to a cyclical peak too,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
“Looking ahead, we think trade volumes are probably close to a cyclical peak. Admittedly, the current supply constraints should ease over the coming quarters. But at the same time, vaccine roll-outs and looser social-distancing restrictions in developed markets will start to reverse the pandemic-induced surge in demand for Chinese exports.
“Meanwhile, China’s domestic recovery is levelling off, and a tighter policy stance means that the composition of output looks set to shift toward services and away from credit and import-intensive sectors like industry and construction.”
In terms of trading partners, the Association of Southeast Asian Nations (Asean) remained the largest in the first four months of the year, followed by the European Union, the United States and Japan.
China’s exports to the Asean rose by 42.16 per cent to US$41.096 billion in April compared with a year earlier, while imports from the Asean rose by 40.64 per cent to US$31.375 billion.
China’s exports to European Union rose by 23.81 per cent to US$39.918 billion in April compared with a year earlier, while imports rose by 43.28 per cent to US$26.794 billion.
Amid their ongoing dispute, which escalated further on Thursday as China “indefinitely suspended” all activities under the framework of the China-Australia Strategic Economic Dialogue, exports to Australia rose by 19.74 per cent to US$5.25 billion in April compared with a year earlier, while imports rose by 49.31 per cent to US$14.865 billion.
In April, China’s trade surplus with the US rose to US$28.11 billion from US$21.37 billion in March. The April surplus was 22.92 per cent up compared with a year earlier.
China’s imports from the US rose by 51.65 per cent to US$13.94 billion in April, while exports rose by 31.16 per cent to US$42.05 billion.
In the first four months of the year, China’s trade surplus with the US was US$100.68 billion – 58 per cent higher than US$63.676 in the same period of last year, according to the Chinese customs data.
“The stimulus in developed economies (especially the US) sustained demand for products manufactured in China, while the worsening Covid-19 pandemic in many emerging markets, including India and Asean, have also benefited China’s exports in two ways: it has made those EM countries less competitive against China, and, in some cases, these EM have had to rely on China for personal protective equipment (PPE) and other products to combat Covid-19.
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