China's foreign trade decelerated sharply in April, with both export and import growth falling well short of expectations. That raises fresh concerns about a hard landing for the world's second-largest economy amid weakening global demand.
Exports rose 4.9 per cent last month from a year earlier, while imports rose just 0.3 per cent, data released yesterday by the General Administration of Customs showed.
The results were far below economists' expectations. Market forecasts and surveys had suggested growth of over 10 per cent for imports and growth of around 8.5 per cent for exports.
Most economists agreed that the disappointing data would increase the likelihood of supportive policy measures being announced, since both export and import growth in April saw a pull-back on a monthly basis amid sluggish demand both at home and abroad.
Qu Hongbin, co-head of HSBC's Asian economics research, said the sharp slowdown in export growth underlined the strong external headwinds, while the steep deceleration of import growth signalled sustained weakness in domestic investment demand. China's trade surplus for April widened to US$18.4 billion, up from US$5.4 billion in March, exceeding expectations of above US$10 billion.
Normally a widening trade surplus is a good sign of economic strength, but April's result appeared more related to a weakness in imports, and a sign of deteriorating domestic demand in China for goods ranging from raw materials to consumer goods imported from around the world, and for energy.
Zhiwei Zhang, China chief economist for investment bank Nomura, said the data was likely to have caught policymakers by surprise. Zhang cited the fact that Premier Wen Jiabao had said as recently as April 27 that export and import growth had picked up to 12.7 per cent and 8.3 per cent year on year respectively for the period from April 11 to 20.