China’s imports and exports rebound showing positive shift in April

After experiencing a contraction in the previous month, China’s imports and exports rebounded in April, according to customs data released today. This positive shift indicates a promising enhancement in both local and international demand, providing a vital lift to the nation’s fragile economic recovery.

The upswing in data suggests that the numerous policy support measures introduced in recent times are beginning to yield results, thereby stabilising investor and consumer confidence, which had previously been wavering. Last month, China’s exports rose by 1.5% year-on-year, matching the prediction made by economists in a Reuters poll. This growth follows a fall of 7.5% in March, the first contraction since November.

Meanwhile, April’s imports saw an increase of 8.4%, surpassing the anticipated rise of 4.8% and reversing the decline of 1.9% witnessed in March, said Zhang Zhiwei, the chief economist at Pinpoint Asset Management.

“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.”

Despite the economy growing faster than projected in the first quarter, data on exports, consumer inflation, producer prices, and bank lending for March suggest that the momentum may be flagging. A prolonged property crisis also continues unabated, prompting calls for additional policy stimulus.

During the first quarter, both imports and exports experienced a year-on-year rise of 1.5%. Several economic indicators exceeded expectations during the January-February period, and a survey of factory owners in March indicated that the world’s second-largest economy had managed to successfully navigate initial hurdles. This has allowed officials additional time to bolster fragile investor confidence and stimulate growth.

Nonetheless, Beijing faces significant challenges. Last month, rating agency Fitch downgraded its outlook on China’s sovereign credit rating to negative, citing risks to public finances as growth slows and government debt increases.

China economy

In response, the Communist Party’s Politburo, the party’s primary decision-making body, announced last month that it would enhance economic support through prudent monetary policy and proactive fiscal policies. These would include adjustments to interest rates and bank reserve requirement ratios.

China has set an economic growth target for 2024 of around 5%, a goal that many analysts believe will be challenging to achieve without substantial additional stimulus. Chinese exporters, who struggled for most of last year due to skyrocketing interest rates impacting overseas demand, may face further challenges as they compete for market share.

Analysts suggest that Chinese exporters are continuing to reduce prices to sustain sales abroad amidst weak domestic demand conditions, stated Dan Wang, the chief economist at Hang Seng Bank China.

“Overcapacity in many industries will continue to depress export prices in the coming months.

She added, “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 machinery.”

In comparison, to the predicted US$77.50 billion in the poll and US$58.55 billion in March, China’s trade surplus expanded to US$72.35 billion, reported Bangkok Post.