China foreign trade data for April paints mixed picture of the economy

Chinese export growth fell back unexpectedly last month and while an acceleration in imports pointed to an improvement in the domestic economy, economists were somewhat divided on the strength one could expected of any rebound.

According to customs data, in US dollar terms the year-on-year rate of export growth slowed from a jump of 14.2% for March to a dip of 2.7% for last month, which was shy of the consensus forecast for an increase of 3.0%.

Part of the slowdown could be explained by shifts in the timing of the Chinese New Year, but even after seasonally-adjusting the figures, Julian Evans-Pritchard at Capital Economics estimated that exports declined by 3.0% month-on-month.

Year-on-year import growth meanwhile surprised to the upside, hitting a six-month high of 4.0% (consensus: -2.1%) and was up by 3.6% on the month.

For Freya Beamish at Pantheon Macroeconomics: "imports are just about bottoming out, confirming the short-term signals from the PMIs. Looking further ahead, the ongoing upturn in M1 growth points to a sustained recovery in imports in the second half of the year."

China's total trade surplus printed at $13.84bn (consensus: $35bn) after a reading of $32.4bn for March, while the bilateral shortfall in trade with the US widened from $20.5bn in March to $21.01bn.

Clouding the outlook for China's trade was the US President's recent threat to increase American trade levies on $200bn-worth of Chinese goods from 10% to 25%, Evans-Pritchard said, estimating that it could subtract between two and three percentage points from the rate of increase in exports.

"Even if a last-minute deal is struck this week to avoid further tariffs, the downbeat prospects for global growth will probably mean that export growth remains subdued," he added.

For her part, Beamish chipped in, saying: " Trump’s threat over the weekend to impose higher tariffs on China this Friday poses an immediate risk, though talks are ongoing, and the best bet remains that a deal will be made."

Policy stimulus would buoy imports, Evans-Pritchard said, but "with the scale of stimulus smaller than in previous downturns, we don’t anticipate a strong rebound."