China’s March trade worse than expected
Print Edition
CHINA’S trade in March was worse than expected with both exports and imports down, figures from the General Administration of Customs showed yesterday.
However, some analysts said exports were probably stronger than they appeared. They said data suffered from comparison with last year, when exporters were thought to have reported inflated values for goods as a way to evade currency controls and bring extra money into the country.
Exports fell 6.6 percent from a year earlier to US$170.1 billion, although that had narrowed from February’s decline of 18.1 percent.
Imports fell 11.3 percent to US$162.4 billion, compared with February’s 10.1 percent increase.
The trade surplus was US$7.7 billion, compared with a deficit of US$960 million in the same period of last year.
China’s leaders are trying to nurture growth based on domestic consumption instead of a worn-out model reliant on investment and trade. But those plans depend on strong exports to support employment during the transition. China is forecasting annual trade growth of 7.5 percent, but so far this year, official data show total exports and imports down by 1 percent.
Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said trade has deteriorated due to the central bank’s policy squeeze.
“It was a reflection of the intervention by the People’s Bank of China in both the foreign exchange and interest rate markets to counter hot money inflows,” Zhou said.
New export orders in the official Purchasing Managers’ Index and the HSBC PMI, two gauges of operating conditions in the manufacturing sector, rebounded significantly in March, suggesting conditions were not that dismal, Zhou said.
“We believe that China’s trade growth in the first few months was distorted due to the movement of speculative money ... our field study showed that exports are more resilient than what the headline data suggest,” Zhou said.
In a report, RBS economist Louis Kuijs said: “While the export data will add to worries among policy-makers and in the market about growth slowing down precariously or China losing competitiveness, we would caution against such interpretations.”
He said that with data distortions factored out, China’s exports in March might have grown by as much as 5.2 percent, on par with South Korea.
Chang Jian, an economist at Barclays, said the March trade growth figures were a surprise.
“The details showed a broad-based slowdown in imports, and we lowered our first-quarter economic growth forecast to 7.2 percent,” Chang said.
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