China trade: export growth slowed to lowest level in almost 2 years in April, imports flat

  • Exports grew by 3.9 per cent in April compared with a year earlier, down from 14.7 per cent growth in March, while imports remained flat
  • China’s imports from the United States dropped by 1.2 per cent from a year earlier to US$13.7 billion in April, while exports grew by 9.4 per cent to US$46 billion

China’s export growth slowed to its lowest rate since June 2020 in April, data released on Monday showed, while imports remained flat.

Exports grew by 3.9 per cent last month from a year earlier to US$273.62 billion, compared with growth of 14.7 per cent in March.

The export figure, though, was above the median result of a survey of analysts conducted by Bloomberg, which had predicted 1.9 per cent growth last month compared to a year earlier.

Imports, meanwhile, remained flat in April from a year earlier at US$222.5 billion, compared with a fall of 0.1 per cent in March.

The April figure was above expectations in the Bloomberg survey, which had predicted a fall of 3.2 per cent.

“Goods trade softened further last month. Virus disruptions continued to take a toll but the main headwind to exports is weakening foreign demand,” said Julian Evans-Pritchard, senior China economist at Capital Economics.”

“The blame rests partly with China’s Covid-19 outbreak, which has led to manpower shortages and bottlenecks in the logistics sector. But the extent of these disruptions shouldn’t be overplayed.”

“Instead, the drop in exports seems to mostly reflect softer demand. The sharpest falls were in shipments to the EU and US, where high inflation is weighing on real household incomes. The declines were also especially pronounced in electronics exports which suggest a further unwinding of pandemic-linked demand for Chinese goods.”

Overall, China‘s total trade surplus was US$51.12 billion in April compared to US$47.3 billion in March.

Beijing’s economic growth target of “around 5.5 per cent” is being increasingly questioned as rigid lockdowns from March have already taken a toll on retail sales, production capability and logistics.

Externally, the Russia-Ukraine war has driven up global commodities prices, forcing the world’s largest buyers of iron ore, crude oil, soybeans and many other products to pay more, while ongoing tensions with Washington and Brussels have blurred the outlook for Chinese exports.

Additionally, some foreign investors have trimmed their holdings of Chinese stocks and bonds in anticipation of more interest rate hikes by the US Federal Reserve, putting pressure on the yuan exchange rate and foreign exchange market.

“The sharp decline of export growth is mostly driven by the lockdowns in many cities including Shanghai. Export growth may stay weak in May, as disruptions to supply chains force manufacturers to lower output. The contraction of imports is a signal, as many firms’ imports of parts of components probably got disrupted. The resumption of production is quite slow at this stage,” Zhang Zhiwei, chief economist at Pinpoint Asset Management.”

“China faces a dilemma: how to contain Omicron outbreaks without causing too much damage to the economic activities. Trade is sensitive to the ‘zero tolerance’ policy. The Politburo meeting on May 5 emphasised the importance of managing risk of virus spreading to China through cargos. This indicates the inspection of imports will likely become tougher, which may slow imports further, and affect exports as well.”

China’s imports from the United States dropped by 1.2 per cent from a year earlier to US$13.7 billion in April, while exports grew by 9.4 per cent to US$46 billion.

In April, China’s trade surplus with the US widened by 14.7 per cent from a year earlier to US$32.2 billion, up from US$32.086 billion in March.

The 10 countries of the Association of Southeast Asian Nations (Asean) retained their place as China’s largest trade partner, followed by the European Union and the US.

China’s exports to the Asean countries grew by 7.6 per cent compared with a year earlier to US$44.2 billion in March, while imports rose by 4.5 per cent to US$32.7 billion.

In April, China’s imports from the European Union dropped by 12.5 per cent to US$23.4 billion, while exports grew by 7.9 per cent to US$43 billion.

China’s trade surplus with the European Union, meanwhile, widened by 49.6 per cent from a year ago to US$19.6 billion.

Authors: Orange Wang, Andrew Mullen, SCMP

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