China Economy

China says exports rose 3.5% in April, crushing expectations for a decline of 15.7%

Key Points
  • Data from the General Administration of Customs released on Thursday showed exports rose 3.5% from a year ago in April. Economists polled by Reuters had expected exports to have fallen 15.7%.
  • Meanwhile, April imports fell 14.2% from a year ago. Economists polled by Reuters had expected imports to have fallen 11.2% from a year earlier.
  • China's trade surplus for the month of April was $45.34 billion as compared to the $6.35 billion economists polled by Reuters had predicted.
  • Exports of medical supplies surged in April.

China's dollar-denominated exports unexpectedly rose in April, but imports fell the same month as movement restrictions to contain the coronavirus outbreak eased.

According to data from the General Administration of Customs released on Thursday, exports rose 3.5% from a year ago while imports fell 14.2% in the same period.

Economists polled by Reuters had expected exports to have fallen 15.7% in April from a year earlier while imports were expected to have fallen 11.2% from a year earlier.

In March, China's exports fell 6.6% from a year ago, while imports slipped 0.9% in the same month.

China's trade surplus for the month of April was $45.34 billion — compared to the $6.35 billion economists polled by Reuters had predicted. China reported trade surplus of $19.9 billion for the month of March.

China's trade surplus in April was the largest since December last year when the surplus was about $47 billion.

Ahead of the data release, Liu Li-gang, chief economist for China at Citigroup, said the country's medical exports likely rose in April as it shipped health-care goods to the rest of the world.

"The number in the early part of April was very strong already," Liu told CNBC before the official data was released.

Nomura economists noted a surge in the exports of antivirus medical supplies with the export value of such items jumping from about 1 billion Chinese yuan ($141 million) in April 1 to April 10, to more than 3 billion Chinese yuan ($423 million) in late April, they wrote in an analysis of the customs data on Thursday.

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The exports of such medical supplies — that includes 27.8 billion face masks and 130 million protective suits — could have boosted headline export growth in March and April by as much as 2.7 percentage points from a year ago.

Factories were also likely fulfilling a backlog of orders as Chinese workers gradually headed back to work after an extended lockdown from late January. 

"But this prop should soon fade, with exporters unlikely to be immune from the sharp slowdown in global activity for long," said Julian Evans-Pritchard, senior China economist at Capital Economics. Global demand will likely remain weak for months, he added.

Nomura analysts also said April's export growth would not be sustainable, with growth likely to drop significantly in May and June.

Two separate manufacturing Purchasing Manager's Index surveys showed activity was weak for the month of April as export orders dropped.

Chinese businesses are reopening and getting back to work as the daily number of new coronavirus cases slow in the country.

But the situation remains serious in the rest of the world with more than 3.74 million people infected so far, according to data compiled by Johns Hopkins University. Many economies have come to a halt due to widespread lockdowns, hitting consumption and demand.

Even though China looks like it's turning the corner in the pandemic, with domestic tourism returning over the Labor Day holidays from May 1-5, challenges still remain where demand is concerned, said Helen Qiao, head of Asia economics at BofA Securities.

There is some pent-up demand after lockdowns, but low-income households have been hit much more by the movement restrictions, Qiao told CNBC on Thursday before the data release.

Spending on services would also be lower than a year ago. "People may feel probably a bit worried or nervous about going to malls, to dine there, or to stroll around, or to send their kids to their English extra curricular education center etc.," said Qiao.

There are also concerns over China's current political standoff with the U.S. over the coronavirus pandemic, with President Donald Trump threatening additional tariffs on China in retaliation for the outbreak.

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