China: Exports contract in April as U.S. sanctions bite
In April, exports fell 2.7% over the same month last year, which contrasted the 13.8% expansion in March. The print contrasted the 2.3% increase that market analysts had expected. April’s print reflected sluggish global demand as well as a sharp decline in shipments to the United States as a result of the ongoing trade spat between the two countries.
Imports expanded 4.0% in annual terms in April, contrasting the 7.9% drop recorded in March. The reading also contrasted the 3.6% decline that market analysts had forecast. April’s healthy reading is good news for the Chinese economy as it signals a recovery in domestic demand.
As a result of the strong increase in imports, the trade deficit fell from USD 26.2 billion deficit in April 2018 to USD 13.8 billion surplus in April 2019 (March: USD 32.4 billion surplus). The 12-month moving sum of the trade surplus fell from USD 382 billion in March to USD 369 billion in April.
Looking forward, Yi David Wang and Irene Feng, analysts at Credit Suisse warn that:
“With the US-China trade negotiation expected to be a source of volatility for trade data going forward, we see some downside risks in the Chinese manufacturing investment which has already shown deceleration in Q119 GDP and FAI data”