Chinese foreign trade up 4.3%

China’s exports growth retreated in April, while growth in imports rose to a six-month high, according to China Customs.

The nation's total foreign trade rose 4.3 percent from a year earlier to 9.51 trillion yuan (US$1.41 trillion) in the first four months, the General Administration of Customs said on Wednesday.

Exports increased by 5.7 percent year on year to 5.06 trillion yuan during this period, while imports rose by 2.9 percent to 4.45 trillion yuan, making the trade surplus expand by 31.8 percent to 618.17 billion yuan.

As for the April figure, China's import and export value totaled 2.51 trillion yuan, up by 6.5 percent year on year. Exports rose 3.1 percent to 1.3 trillion yuan from a year earlier, lower than the expected 8 percent growth and the 21.3 percent jump in the previous month. 

Imports, however, increased by 10.3 percent to 1.21 trillion yuan in April from the same period last year, faster than the expected 3 percent, reversing the 1.8 percent decline in March.

In dollar terms, export growth fell to a worse-than-expected level, falling 2.7 percent year on year in April, compared with the 14.2 percent rise in March, while import growth rose to a higher-than-expected 4 percent, reversing the precious 7.6 percent drop. The trade surplus shrank to US$13.8 billion last month from US$32.6 billion in March.

"We believe the slowdown in export growth was mainly due to the end of calendar-related effects from the Lantern Festival, which was on March 2 last year but on February 19 this year, and payback effects after March’s front-loading of exports to avoid a reduction in value-added tax rebates," said Lu Ting, chief China economist at Nomura.

In mid-March China announced a cut in VAT on manufactured goods to 13 percent from 16 percent which became effective on April 1. 

"In the same vein, the VAT cuts may have lowered import growth in March and led to the rise in April, as importers were inclined to postpone customs clearing of imports from March to April to pay the lower VAT rate on imported goods," Lu said.

By region, China's foreign trade with the US retreated in the first four months from the same period last year, and the trade surplus expanded. 

China’s exports to the US contracted 4.8 percent in January-April year on year, while imports from the US declined 26.8 percent, leading to a trade surplus reaching 570.19 billion yuan, up 10.5 percent

Meanwhile, China's imports and exports to major markets such as the European Union, ASEAN and Japan all posted rises, and those to countries along the "Belt and Road" grew at a faster pace than the overall rate.

In terms of commodities, crude oil and natural gas imports increased in the January-April period, while imports of soybean declined.

In April alone, Chinese crude oil imports hit an all-time high, and soybean imports posted the biggest month-on-month rise of 55 percent. Iron ore imports, however, tumbled to an 18-month low due to reduced shipments from Brazil.

Also of note, imports and exports from private enterprises increased rapidly, accounting for a higher proportion of the overall figure.

In the first four months, private enterprises' imports and exports totaled 3.9 trillion yuan, up 11 percent, accounting for 41 percent of China's total foreign trade, up 2.5 percent from the same period last year. 

Exports increased by 13.1 percent to 2.53 trillion yuan, making up 49.9 percent of the total, while imports rose 7.3 percent to 1.37 trillion yuan, accounting for 30.7 percent of overall imports. 

During the same period, foreign-invested enterprises' imports and exports totaled 3.87 trillion yuan, down 1 percent to make up 40.7 percent of the total foreign trade. The imports and exports of state-owned enterprises edged up by 2.9 percent to 1.7 trillion yuan, accounting for 17.9 percent of the headline figure.

Nomura expects China’s export growth to rebound slightly in May but remain weak in the coming months at around zero growth on sluggish external demand, the global tech down-cycle, yuan appreciation before April and a sudden escalation of the trade conflict with the US. 

China has confirmed that Vice Premier Liu He will be going to the US on May 9-10, even after the US refreshed its threat of raising additional tariffs on China's US$200 billion of exports to the US as soon as this Friday. 

"However, the chance of finalizing the bilateral trade talks during Liu’s visit has declined and the risk of renewed trade tensions has risen," said Betty Wang, senior China economist at the Australia and New Zealand Banking Group.

"This would cloud China’s export outlook in the second half of the year, especially considering how much of China’s exports were front-loaded late last year," Wang said.