Chinese exports rise slightly in April, but markets wary

China's exports improved last month as a weaker currency boosted sales overseas, yet initial market talk was of a lack of a sustained improvement in exports which was having a 'knock-on' effect on suppliers to Chinese firms throughout the Asia-Pacific region.

In yuan terms exports increased by 4.1% on a year before, but were still lower by 1.8% over that same time-frame when measured in US dollars, according to the country's customs administration.

Economists had been expecting exports to remain virtually flat versus the prior month.

That followed a 11.5% jump in exports in US dollar terms during the month of March, with the data flattered in part by a low base of comparison with the year before.

Imports on the other hand were down by 10.9% in US dollar terms in April, more than doubling market forecasts in terms of the expected percentage variation, resulting in a trade surplus of $45.6bn.

The year year-to-date falls for exports and imports in yuan terms came in at -2.1% and -7.6% in dollar terms.

Thus far in 2016, the value of the Chinese currency had changed little against the US dollar but had depreciated 4.3% when measured against a basket of its 13 main trading partners or in so-called trade-weighted terms - helped in part by the slower pace of rate hikes in the US.

Data released on 7 May revealed the country's international reserves rose edged higher for a second consecutive month, by $7.1bn to $3.2trn, albeit flattered by weakness in the greenback which results in a higher value for China's holdings of euro and yen-denominated assets.

"We think the April data should be compared with the average for Q1 as a whole in order to iron out seasonal distortions due to year-to-year shifts in the timing of Chinese New Year, which dragged down trade growth in February then boosted it in March. On this basis, the latest data appear less downbeat. Both imports and exports remained basically stable last month in seasonally adjusted level terms," Julian Evans-Pritchard at Capital Economics said in a research report sent to clients.

Evans-Pritchard also sounded an optimistic note regarding the risk of capital outflows should the US dollar appreciate again later in the year.

"There is a risk that large scale capital outflows could return later this year if, as we expect, the dollar begins to strengthen again. But with the stock of liquid external liabilities now significantly reduced compared to a year ago, the likelihood that outflows accelerate to the pointthe renminbi has diminished."