BEIJING- China’s exports were expected to have risen again in April, albeit at a less robust pace than a month earlier, a Reuters poll showed, supported by unfulfilled orders after last year’s COVID disruptions though slowing global growth is darkening the outlook.
Outbound shipments last month from the world’s second largest economy is expected to show growth of 8.0 percent year-on-year, following an unexpected surge of 14.8 percent in March, according to the median forecast of 27 economists in the poll finalized on Monday.
Imports are still expected to paint a less favorable picture of the overall economy, with economists predicting no growth, similar to April, 2022, after falling by 1.4 percent year-on-year in March.
The trade data will be released on Tuesday.
With many of China’s major trade partners on the brink of recession, analysts remain wary about the outlook, noting that the stunning improvement in March partly reflects suppliers catching up with unfulfilled orders from last year’s COVID disruptions.
The cautious stance was backed by the recent official manufacturing purchasing managers’ index for April showing new export orders contracting sharply and underlining the challenge facing Chinese policymakers and businesses hoping for a robust post-COVID economic recovery.
“We believe March’s 14.8 percent year on year growth is unsustainable and monthly export growth may drop to low single-digit or even into negative territory again,” Ting Lu, chief China economist at Nomura, wrote in a note, citing a slowing global economy and rising geopolitical tensions.
South Korean exports to China, a leading indicator of China’s imports, were down 26.5 percent in April, continuing 10 consecutive months of decline.
China’s economy grew faster than expected in the first quarter thanks to robust services consumption, but factory output has lagged amid weak global growth. Property market weakness, slowing prices and surging bank savings are raising doubts about demand.
The government has set a modest GDP growth target of around 5 percent for this year, after badly missing the 2022 goal.
China’s exports unexpectedly surged in March, with officials flagging rising demand for electric vehicles, but analysts cautioned the improvement partly reflects suppliers catching up with unfulfilled orders after last year’s COVID-19 disruptions.
Exports in March shot up 14.8 percent from a year ago, snapping five straight months of declines and stunning economists who predicted a 7.0 percent fall in a Reuters poll.
But analysts say the jump was more likely related to exporters rushing to fulfil a backlog of orders that had been disrupted by the pandemic in past months, and warned the global demand outlook remained subdued.
“The wave of COVID outbreaks in December and January likely depleted factories’ inventories. Now that factories are running at full capacity, they caught up the cumulated orders from the past,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.”
“The strong export growth is unlikely to sustain given the weak global macro outlook,” he added.
Meanwhile, imports fell less than expected, with economists pointing to an acceleration in the purchase of agricultural products, especially soybeans, as providing some support.
Imports dropped just 1.4 percent, smaller than the 5.0 percent decline forecast and a 10.2 percent contraction in the previous two months. Increases in crude oil, iron ore and soybeans imports in the month were offset by a decline in copper imports.
China’s factory activity unexpectedly contracted in April as orders fell and poor domestic demand dragged on the sprawling manufacturing sector, a private survey showed on Thursday, imperilling the broader economic outlook for the second quarter.
The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.5 in April from 50.0 in March. The 50-point index mark separates growth from contraction on a monthly basis.
The reading missed expectations of 50.3 in a Reuters poll and marked the first contraction since January when the exit from zero-COVID policies led to a wave of infections across China and briefly hit production lines.
It echoes a similarly dissappointing official PMI released and reflects the unevenness of China’s economic recovery, with the services sector so far outperforming manufacturing and helping the world’s second-largest economy grow a robust 4.5 percent year-on-year in the first quarter.
Production growth slowed for the second straight month in April as weaker-than-anticipated new orders dampened output, the private Caixin survey showed.
New orders shrank for the first time in three months, although new export orders swung back to growth from a contraction in March.
Muted client demand led manufacturers to cut their staffing levels at the quickest pace since January. This was mostly through attrition, though some firms also trimmed headcount to cut costs. – Reuters
