April exports dive 22.6pc to make case for further pump-priming
Mainland exports fell more than expected last month, dashing hopes of an early recovery in trade and putting more pressure on government pump-priming to rejuvenate a sluggish economy.
Exports shrank an annualised 22.6 per cent to US$91.94 billion, worse than economists' forecast for an 18 per cent slide and the 17.1 per cent drop in March, the Administration of Customs said yesterday.
Imports dropped 23 per cent to US$78.8 billion, better than the 25.1 per cent decline in March, as stronger domestic consumption and a recovery in commodity prices kicked in.
The trade surplus narrowed 20.1 per cent to US$13.1 billion, compared with a 41.2 per cent expansion in March.
In a sign Beijing's 4 trillion yuan (HK$4.54 trillion) stimulus package is becoming the engine of economic growth, separate figures showed fixed-asset investments - including spending on property, infrastructure and factories - rose more than expected in the first four months.
The Ministry of Commerce said slowing overseas demand, rising trade protectionism and weaker foreign currencies had combined to cloud prospects for exports.
With the current economic situation, 'we cannot be optimistic about the outlook of our exports', the ministry said, vowing to step up fiscal measures to boost trade.
The disappointing trade figures contrast with Minister of Commerce Chen Deming's claim two weeks ago that trade was showing signs of improving.
The customs bureau said that based on the number of days worked last month, exports actually rose 6.9 per cent and imports climbed 15.1 per cent from March.
Economists also saw some light at the end of the tunnel, with Goldman Sachs, Barclays Capital, Bank of America-Merrill Lynch, Morgan Stanley and Citigroup saying the recent free fall in exports had stabilised even though overseas trade would remain weak in coming months.
'Underlying momentum may not be as bad as the [April export figure] indicates,' Barclays Capital economist Peng Wensheng said. 'With exports likely to stay weak and consumption possibly moderating, investment is likely to be the main driver of growth in the second quarter.'
Guangdong, dubbed 'the world's factory', saw exports shrink 16 per cent to US$27.69 billion last month, a marked improvement from the 22.4 per cent drop in March. Beijing and the coastal regions of Jiangsu, Shanghai, Zhejiang, Shandong and Fujian posted a less drastic fall in exports.
The customs bureau said a decline in overseas consumption of labour-intensive exports including textiles and garments, shoes, furniture and plastic products slowed from March.
In the first four months,exports fell 20.5 per cent to US$337.42 billion and imports dropped 28.7 per cent to US$261.99 billion, lifting the surplus 32.4 per cent to US$75.43 billion.
However, economists said the mainland would have to bank on its stimulus measures to pull the economy out of the doldrums. The National Bureau of Statistics said fixed-asset investments surged a surprisingly strong 30.5 per cent in the first four months of the year.
The growth, which outstripped the market consensus of a 29.1 per cent rise, was 1.9 percentage points higher than the 28.6 per cent gain in the first quarter.
Economists said it signalled the impact of the nation's economic stimulus measures and strong lending growth.
'The strong capital investment growth will offset [the negative impact of] weakening exports,' China International Capital Corp chief economist Ha Jiming said.
However, some economists warn private investment sentiment is still weak, reflecting the economy's reliance on state firms, which spent 1.6 trillion yuan on fixed-asset investments during the first four months.
That was a 39.3 per cent increase from a year earlier and made up 43.3 per cent of the mainland's total investments. State companies accounted for 42.6 per cent of total investments in the first quarter.
'Strong stimulus spending and a surge in new loan approvals appear to be driving the strong growth in investment rather than a healthy economic outlook,' said Matt Robinson, of Moody's Economy.com.