BEIJING - China’s exports and imports returned to growth in April after contracting in March, customs data showed on May 9, signalling an encouraging improvement in demand at home and overseas in a boost to a shaky economic recovery.
The data suggests a flurry of policy support measures over the past several months is gaining traction and helping to stabilise fragile investor and consumer confidence.
Shipments from China grew 1.5 per cent year on year in April, in line with the increase forecast in a Reuters poll of economists. They fell 7.5 per cent in March, which marked the first contraction since November.
Imports for April increased 8.4 per cent, beating an expected 4.8 per cent rise and reversing a 1.9 per cent fall in March.
“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 Pinpoint Asset Management chief economist Zhang Zhiwei.
China’s economy grew faster than expected in the first quarter, although data on exports, consumer inflation, producer prices and bank lending for March showed that momentum could be faltering again. A protracted property crisis is also showing few signs of abating, spurring calls for more policy stimulus.
In the first quarter, both imports and exports rose 1.5 per cent year on year.
A string of forecast-beating economic data over the January to February period and a factory owners survey for March suggested the world’s No. 2 economy had managed to successfully navigate some early challenges, buying officials more time to lift fragile investor confidence and revitalise growth.
However, Beijing has its work cut out. Rating agency Fitch cut its outlook on China’s sovereign credit rating to negative in April, 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, in April said 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.
China has set an economic growth target for 2024 of around 5 per cent, which many analysts say will be a challenge to achieve without much more stimulus.
Chinese exporters had a tough time for most of 2023 as soaring interest rates weighed on overseas demand. With the Federal Reserve and other developed nations showing no urgency to cut borrowing costs, manufacturers may face further strains as they battle for market share.
Analysts say Chinese exporters are continuing to slash prices to maintain sales abroad amid stubbornly weak domestic demand. That was highlighted by export volumes edging up to record highs in March.
“Overcapacity in many industries will continue to depress export prices in the coming months,” said Hang Seng Bank China chief economist Dan Wang.
“As more Chinese companies make investments overseas to get around potential sanctions from the US, we expect more exports of industrial inputs like chemicals, fabric, auto parts and electric machineries,” she added.
China’s trade surplus grew to US$72.35 billion (S$98 billion), compared with a forecast of US$77.5 billion in the poll and US$58.55 billion in March. REUTERS
