China's trade data for April reveals positive growth in exports, marking a second consecutive month of expansion. Meanwhile, imports experienced a decline. Economists had predicted a slight increase in exports and stable imports. Additionally, China's inflation is expected to slow down, with a modest rise projected for prices.
- Export Growth and Import Decline:
China's exports in April increased by 8.5% in U.S. dollar terms, extending the previous month's growth trend. In contrast, imports fell by 7.9% compared to the same period last year. The March data showed a surprise jump in exports by 14.8% while imports declined by 1.4%.
- Trade Surplus:
April's trade surplus expanded to $90.21 billion, surpassing the surplus of $88.2 billion recorded in March. This growth indicates a robust balance in China's international trade activities.
- Seasonal Factors:
Economists at Goldman Sachs attribute the softer trade data in April to “residual seasonality” following the Lunar New Year. They expect this seasonal bias to slow export growth but anticipate a dissipation of these effects in the coming months.
- Manufacturing Sector:
China's manufacturing sector experienced a contraction in April, as reflected in the National Bureau of Statistics' manufacturing purchasing manager's index. The index dropped to 49.2 from the previous month's reading of 51.9. Despite this decline, China's service sector remains a bright spot in the economy.
- Economic Outlook:
Goldman Sachs economists maintain their forecast of 6% full-year growth for China's economy in 2023. They note that while near-term growth concerns are gradually fading, deflationary pressures are a minor risk for the next couple of years.
- Inflation Expectations:
China's inflation data, set to release on Thursday, is expected to show a year-on-year rise of 0.3%, with flat month-on-month prices. However, the producer price index is predicted to decline for the seventh consecutive month, with economists anticipating a drop of 3.2%. Chinese central bankers remain confident in a rebound for inflation as the output gap narrows and a new credit cycle begins.
China's trade data for April indicates continued growth in exports and a decline in imports. The trade surplus has expanded, reflecting a healthy balance in international trade. While the manufacturing sector experienced contraction, the service sector remains resilient. Inflation is expected to rise modestly, with an optimistic outlook for the future.