Hopes for factories as export drop eases
Mainland exports dropped less than expected last month, raising hopes that the worst may be over for the country's battered factories after a five-month tumble in overseas shipments.
Exports dropped 17.1 per cent to US$90.29 billion, better than analyst expectations of a 20 per cent decline and easing from the 21.1 per cent slide seen in January and February.
Imports plummeted 25.1 per cent to US$71.73 billion, bigger than an expected drop of 22 per cent but smaller than the 34.2 per cent fall seen in the first two months of the year.
Last month's figures sent the trade surplus 41.2 per cent higher to US$18.56 billion.
Many economists said the export slump of the past five months was finally showing signs of abating, with the Administration of Customs describing the latest export figures as a 'marked improvement'.
However, they cautioned that imports would remain weak in the near future, overshadowed by prevailing low commodity prices and the destocking of mainland factories and overseas importers.
'It is the beginning of stabilisation,' Citibank economist Ken Peng said yesterday. 'We should have seen stronger import numbers last month. We had more money in place, but we're not importing more and that's surprising.'
Mr Peng said the 4 trillion yuan (HK$4.54 trillion) government-driven spending spree should have spurred demand for imported goods.
Economists said despite rising import volumes, there had been a sharp downturn in the value of the shipments because of lower commodity prices.
They said some importers appeared to have taken advantage of weaker prices for grains, iron ore, copper and aluminium to increase buying.
For example, copper products soared 32.9 per cent in volume but tumbled 32 per cent in value in the first three months of this year.
A Goldman Sachs report anticipated investment growth will accelerate strongly in the coming months as the impact of the economic stimulus package spreads, fuelling imports of commodities and machinery.
The mainland ended the first quarter with exports dropping 19.7 per cent to US$245.54 billion and a 30.9 per cent decrease in imports to US$183.19 billion, catapulting the surplus 50.44 per cent higher to US$62.35 billion.
Shipments to the top three trading partners - the United States, the European Union and Japan - declined last month year on year but showed growth on a month-on-month basis.
Exports to the EU saw the biggest decrease of 20.2 per cent last month, or 22.1 per cent in the first quarter from the same period last year. Exports to the US declined 12.6 per cent last month and 14.9 per cent in the quarter.
The latest export figures are consistent with the National Bureau of Statistics' purchasing managers' index.
The index was the first macroeconomic indicator last month to signal a return to expansionary territory with a reading of 52.4 from 49 in February.
It breached the 50 boom-bust line for the first time in nine months, with a marked improvement in manufacturing activities.
Despite the signs that exports were stabilising, economists have mixed views on whether the central government will introduce fresh measures to bolster the nation's economic recovery.
Mr Peng said the mainland needed to execute the massive stimulus measures, which he expected would boost economic growth in the third and fourth quarters.
Nomura International (Hong Kong) economist Sun Mingchun, who forecast the substantial drop in exports and imports would moderate in coming quarters, said he would not be surprised to see more stimulus efforts.
'The measures will definitely be good for the short term, but if we can have more, it will mean sustainable growth in the economy,' Mr Sun said. 'Extra measures will help upgrade the country's industries.'