China exports, imports fall sharply in April

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China's exports and imports tumbled in April, dashing hopes of a seasonal rebound and underscoring concerns over the soggy trade picture in the world's second biggest economy.

Exports fell 6.4 percent in April from the year-ago period, coming in worse than the 2.4 percent rise forecast in a Reuters poll and following a 15 percent plunge in March.

Imports dived 16.2 percent on year, also missing the 12 percent expected drop and after falling 12.7 percent in March.

This brought the trade surplus for the month to $34.13 billion, compared with the $39.45 billion forecast and March's print of $30.8 billion.

The news dampened prospects for Australia, one of the mainland's major trading partners, and the Australian dollar fell to fresh session lows on the news, easing to $0.7859.

Markets had been hoping April's trade numbers will rebound from the depressed levels in February and March blamed on the Lunar New Year holiday.

"This [Lunar New Year] effect should have fully dissipated last month, so it is slightly surprising that export growth remained in negative territory," said Julian Evans-Pritchard, China economist with Capital Economics, in a note. "The trade data suggest that both foreign and domestic demand has softened going into the second quarter."

Weak external and domestic demand has been a key factor behind the slowing Chinese economy, which Beijing expects will grow around 7 percent this year.

The economy expanded 7.4 percent in 2014, its slowest pace in 24 years and undershooting the government's target for the first time since 1998.

The People's Bank of China (PBOC) has responded with a series of monetary stimulus measures, most recently cutting the reserve requirement ratio (RRR) of major banks by 100 basis points to 18.5 percent in April, and analysts are expecting further moves.

"I think you'll still see some couple policy rate cuts here, maybe 25-50 basis points, in the next few months or couple of quarters," said Paul Mackel, head of Asia FX Research of HSBC, told CNBC. "Also on the RRR side of things, I think that when they moved by a 100 basis points in April, that suggested that they're prepared to be a little more aggressive than people think."

Looking forward, analysts are divided over the health of the China's trade.

"As the port throughput data remain soft, we continue to see strong headwinds in China's trade sector in the foreseeable future," Liu Li-Gang and Zhou Hao, analysts at ANZ Research, wrote in a note.

"We expect that authorities will reduce tax burdens by rolling out more export tax rebates and will cut interest rate further to lower firms' funding costs. In addition, it is likely that China needs to add targeted stimulus on both fiscal and industrial sectors," they added.

Capital Economics, however, expects the trade numbers, especially on the exports front, to improve.

"Economic growth in developed markets likely to hold up relatively well this year and most other indicators, including the export orders component of both manufacturing PMIs, don't suggest that foreign demand is falling off a cliff. As a result, we expect negative export growth to prove short lived," said Evans-Pritchard.