Chinese exports and imports slow more than expected in April

Chinese export and imports slowed in April amid a small increase in capital outflows but economists were optimistic on both counts.

In local currency terms, export growth slowed from a 22.3% year-on-year clip in March to 13.4% in April (consensus: 16.8%) while import growth slipped from 26.3% to 18.6% (consensus: 29.3%).

Nevertheless, Julian Evans-Pritchard, China economist at Capital Economics, pointed to export growth of 10.7% in January to February to make the case that external demand still appeared strong.

Shipments to other emerging markets were doing especially well, he added.

On the import side of the equation, rapid import price deflation was beginning to unwind, weighing on the headline figure, he explained, although import volumes also appeared to have softened.

April's slowdown in imports pushed China's trade surplus from $11.0bn to $38.0bn.

Separate data published on Monday revealed that the value of the Chinese central bank's FX reserves increased by $20bn to $3,030bn in April.

That was entirely the result of valuation effects, so together with the ongoing trade surplus the economist concluded that the People's Bank of China must have continued to sell small amounts of foreign reserves, which he pegged at $25bn.

Yet with the Chinese currency, the yuan, now closer to fair value and the bulk of US dollar strength in the rear-view mirror, capital outflows were unlikely to get out of control, Evans-Pritchard added.

A relatively buoyant outlook for the global economy should also help exports hold up well, although imports were likely to weaken further as Beijing continued to tighten policy.