China Trade Growth Slows in April
(Beijing) — China’s exports and imports increased at a weaker pace in April than in the previous month, government data showed Monday, adding to evidence that growth momentum in the world’s second-largest economy is slowing after a strong first quarter.
Imports rose by 11.9% from a year earlier to $142.0 billion, the weakest pace in four months and down from a 20.3% jump in March, according to figures released by the General Administration of Customs. The increase trailed the median estimate for a gain of 18% in a Bloomberg survey of economists.
Exports grew by 8.0% year-on-year to $180.0 billion in April, the data showed, down from an increase of 16.4% in the previous month and missing the median estimate in the Bloomberg survey for an 11.3% expansion. The trade surplus was $38.0 billion, up from $23.9 billion in March but lower than the $39.8 billion a year earlier.
“Today’s trade data suggest that growth momentum weakened slightly in April,” Nomura International economists Zhao Yang and Wendy Chen said in a research note, adding that the figures reflected “moderating domestic demand.”
April’s trade surplus was higher than the monthly increase in foreign exchange reserves of $20.4 billion reported on Sunday, which pointed to “continued pressure” from capital flight, they said. The gap indicated that other components of the reserves, such as foreign direct investment, probably experienced net capital outflows, Chen said.
China’s purchases of iron ore, copper, and crude oil fell from March in value terms, partly reflecting the decline in commodity prices. But imports also fell in volume terms, adding to signs of softening demand seen in two manufacturing purchasing managers index (PMI) surveys for April released last week.
Imports of iron ore fell by 14% from March and crude oil dropped by 11.8% in volume terms, and they declined by 11.5% and 14.9% respectively by value, according to Caixin calculations. Coal imports, however, rose by 12.2% in volume terms and 15.8% in value from March. China is facing a shortage of domestic coal, and prices have surged after the government imposed capacity cuts last year.
Despite the slower growth in exports in April, analysts said overseas sales remained resilient due to solid demand from major trading partners.
Shipments to the EU rose by 7.1% year-on-year in the January-through-April period, down marginally from an increase of 7.4% in the first quarter. But growth in exports to the U.S. picked up to 11.0% in the period from a 10.0% pace in the first three months, while sales to Japan accelerated to 6.9% from 4.8%.
China’s trade surplus with the U.S. rose to $21.3 billion last month from $17.7 billion in March and $18.1 in April last year, the data show, a widening that may increase tensions with the administration of U.S. President Donald Trump, who met with President Xi Jinping in Florida last month. The two countries agreed to a 100-day plan of trade talks to address trade imbalances and boost U.S. exports.
China’s gross domestic product rose by 6.9% year-on-year in the first quarter after a 6.8% increase in the fourth quarter of 2016, the second straight acceleration and exceeding the 2017 target of around 6.5% announced by Premier Li Keqiang in March. But the trade data follow other closely watched economic indicators in suggesting that the recovery in economic growth may have peaked.
Manufacturing activity lost steam in April, with the Caixin China General Manufacturing PMI falling to the lowest in seven months and the official PMI released by the National Bureau of Statistics showing the weakest reading in half a year.
Analysts said government measures to cool the real estate market, and the central bank's tightening of monetary policy to rein in debt, especially financial leverage, are likely to impact growth over the rest of the year.
Exports may be one of the few positive data points for the economy. Julian Evans-Pritchard, a Singapore-based economist with research firm Capital Economics, said China’s export growth will hold up “given the relatively bright outlook for the global economy this year.”
However, import growth “will continue to face headwinds,” he wrote in a research note after the release of April’s trade figures. “In particular, policy tightening will further weigh on domestic demand in coming quarters, with the impact on import values amplified by declines in commodity prices.”
Contact reporter Fran Wang (firstname.lastname@example.org)
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