China saw a rebound in both exports and imports during April, following a contraction in the previous month, according to customs data reported on Thursday. This turnaround indicates a positive uptick in demand both domestically and internationally, providing a boost to the country’s fragile economic recovery.
Exports from China increased by 1.5% year-on-year last month, aligning with expectations in a Reuters survey of economists. This growth follows a decline of 7.5% in March, the first contraction since November. Import figures for April also showed improvement, rising by 8.4%, surpassing the anticipated 4.8% increase and reversing a 1.9% decrease seen in March.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, highlighted that China’s exports have been a strong aspect of the economy this year, particularly in light of weak domestic demand, which has led to deflationary pressures enhancing export competitiveness.
While China’s economy surpassed growth expectations in the first quarter, data on various fronts such as exports, consumer inflation, producer prices, and bank lending for March indicated signs of potential slowdown. The ongoing property crisis and calls for additional policy support add to the challenges faced by Chinese authorities.
Despite positive economic indicators in the early months of the year, including factory surveys, Fitch’s recent downgrade in China’s sovereign credit rating to negative underscores the risks associated with slowing growth and escalating government debt.
To address these challenges, China’s top decision-making body, the Communist Party’s Politburo, pledged to enhance economic support using monetary and fiscal tools. With an economic growth target of around 5% for 2024, achieving this goal may require substantial stimulus measures, as highlighted by numerous analysts.
Chinese exporters have been navigating a tough environment, with pressures like soaring interest rates impacting overseas demand. The competition for market share, coupled with weak domestic demand, is leading to pricing pressures, prompting Chinese companies to lower prices to maintain sales abroad.
As China navigates through various economic challenges, including overcapacity in certain industries, the outlook suggests continued pressure on export prices in the foreseeable future. Meanwhile, the shift towards more investments overseas by Chinese companies to mitigate potential sanctions may lead to increased exports of industrial inputs like chemicals, fabrics, auto parts, and electric machinery.
The trade surplus for China expanded to $72.35 billion in April, slightly below the poll forecast of $77.50 billion but higher than the $58.55 billion surplus seen in March.
