Explainer | China trade: 5 takeaways from March data as exports tumbled, but ‘reasonable story about external demand’ appears
- China’s exports fell by 7.5 per cent in March compared to a year earlier due to a higher base of comparison
- Imports also fell short of expectations and declined by 1.9 per cent year on year compared to the same period last year
1. Exports tumble in March, but first quarter shows a ‘reasonable story about external demand’
“This was mostly due to a higher base for comparison export values, [which] surged 10.9 per cent year on year in March last year. After accounting for changes in export prices and for seasonality, we estimate that export volumes rose to a fresh high,” said analysts at Capital Economics.
“We doubt shipments can keep rising this quickly, however. The gains over the past year have been at least partly driven by exporters slashing prices. But with the loss-making share of manufacturing firms climbing to record highs, their ability to cut prices has diminished and export prices have stabilised recently.
“The ongoing trade-weighted appreciation of the [yuan] will also serve as a headwind.”
Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, pointed to the fact this March had two fewer working days compared to the same month last year, while the first two months of this year had two more working days than the same period last year, as “export growth slowed more in March”.
“The working day effect distorts the picture, as it often does in the first quarter due to Chinese holidays. This year is a leap year which further complicates the data,” he said.
