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Bloomberg

China’s trade boost as a global incentive is sustaining the export boom

(Bloomberg) – China’s exports rose faster-than-expected in April, suggesting that trade outperformance may last longer than expected this year, driven by global fiscal stimulus. Exports rose 32.3% year over year in US dollar terms in April, the customs government said on Friday that it had exceeded the median of 24.1% in a Bloomberg poll of economists. Imports rose 43.1%, a sign of strong domestic demand and rising commodity prices, resulting in an above-expected $ 42.85 billion trade surplus for the month. Global appetite for Chinese goods remained strong for the month thanks to stimulus packages introduced by developed countries that helped fuel demand for household goods, furniture and electronic devices. With vaccine rollout accelerating and more economies opening up, China’s export growth was widely expected to slow this year as consumers begin to spend more on services. However, April data shows that this has not happened yet. “The export figures clearly reflect a recovering and expanding world economy,” said Hao Zhou, economist at Commerzbank AG in Singapore. “Robust imports and exports also mean that China’s manufacturing industry is still outperforming the service sector to lead the economic recovery.” The low base from a year ago also helped underpin the strong results, but even on an average growth base of two years without these effects, according to an analysis by Bloomberg Economics, export growth in April was much stronger than before the pandemic, at 16.8%. What Bloomberg Economics Says … “Imports have been boosted mainly by higher commodity prices, but also due to a recovery in domestic demand. These factors, which supported Chinese trade, are likely to continue in the near future. – David Qu, China EconomistClick for Full NoteThe US was the largest export market last month, accounting for 15.9% of Chinese goods sold overseas. Southeast Asian countries bought 15.6% of exports while the European Union bought 15.1%. “We expect China’s export growth to remain strong in the second half of the year,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd, citing strong growth in US demand and ongoing coronavirus outbreaks in developing countries like India a relocation of production to China. These trends should support China’s currency, he added. Politburo Meeting Liu Peiqian, economist at Natwest Group Plc, cited the increased global demand for microchips, where Chinese companies are an integral part of the supply chain, as another reason for the “export outperformance” likely to remain a key issue in China’s recovery. In terms of volume, imports of industrial metals and energy products fell slightly in April, she added, suggesting that the recovery in domestic demand may still be relatively weak. At last week’s meeting of the Communist Party Political Bureau, China’s leaders pledged to accelerate domestic demand and reiterated that there would be “no sharp turnaround” in economic policy. However, the government is focused on increasing consumer spending on goods and services while taking a cautious stance on real estate and infrastructure investments, which tend to be more import-intensive. Read More: Chinese Copper Imports Fall With Scorching TollA Rally Enhances Recovery In China Consumer spending was shown by the April Service Purchasing Managers Index compiled by Caixin Media and IHS Markit, up from 54.3 in the previous month to 56.3 and was thus well above the value of 50, which represents an expansion compared to the previous month. However, data from a recent five-day holiday in China showed spending was below pre-pandemic levels, suggesting that China will continue to rely on overseas demand for much of its growth this year. Further details: A breakdown of raw material imports can be found here. While the volume of iron ore imports from January to April increased by 6.7% compared to the same period in 2020, the value of shipments increased by 82.1%. Imports were also increased with the delivery of 24 aircraft in April. On an annual basis, the value of aircraft imports increased by 247% compared to the same period in 2020. In yuan, exports rose 22.2% yoy in April, above the 12.5% ​​forecast by economists in a Bloomberg poll. Imports rose 32.2% below the forecast 33.6% (updates with additional details and comments from economists). More articles like this can be found at bloomberg.com. Sign up now to stay up to date with the most trusted business news source. © 2021 Bloomberg LP