China extended its impressive trade performance in April, with exports unexpectedly accelerating and import growth hitting a decade high, in a boost to the world’s second-largest economy.
A brisk economic recovery in the United States and stalled factory production in other countries hit by coronavirus have propped up demand for goods made in China, analysts say.
Exports in dollar terms surged 32.3 percent from a year earlier to $263.92bn, China’s General Administration of Customs said on Friday, beating analysts’ forecasts of 24.1 percent and the 30.6 percent growth reported in March.
“China’s export growth again surprised on the upside,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding that two factors – the booming US economy and the COVID-19 crisis in India, causing some orders to shift to China – likely contributed to the strong export growth.
“We expect China’s export growth will stay strong into the second half of this year, as the two factors above will likely continue to favour Chinese manufacturers. Exports will be a key pillar for growth in China this year.”
The numbers helped drive up the yuan and stocks in China and other Asian markets.
Imports were also impressive, rising 43.1 percent from a year earlier, the fastest gain since January 2011 and picking up from the 38.1 percent growth in March. It was also slightly faster than the 42.5 percent rise tipped by a poll of analysts by the Reuters news agency, bolstered by higher commodity prices.
But Zhang Yi, chief economist at Zhonghai Shengrong Capital Management, said it remains to be seen if strong import growth, mainly driven by price inflation, could be sustained as China winds down its fiscal support measures.
“It must be noted that the fast year-on-year growth today was largely due to the negative growth a year ago. The two-year average growth was only about 10 percent, which is not that strong.”
Indeed, import volumes for some products are starting to level off. China’s iron ore imports fell 3.5 percent in April from a month earlier, while copper imports dropped 12.2 percent on the month.
China’s trade surplus of $42.85bn was wider than a $28.1bn surplus tipped in the Reuters poll.
However, analysts still expect China’s economic growth to slow from the record 18.3 percent expansion in the January-March quarter as the COVID-19 pandemic disrupts global supply chains, slowing movement of goods and driving up shipment costs.
“Despite the upbeat demand outlook and policy support, supply-side constraints including the global chip shortage, shipping disruption, container shortages, and skyrocketing freight rates are expected to persist for some time,” said Christina Zhu, Economist at Moody’s Analytics in a note on Thursday.
A persistent shortage of semiconductors needed for a wide range of products including consumer electronics and cars is also starting to hurt manufacturers, weighing on production.
Etelec electronics, a Zhongshan-based manufacturer of LED lights, stopped taking on new orders from April 26, due to a shortage in integrated circuits, the company announced in a statement seen by Reuters.
China’s official manufacturing purchasing managers’ index last week showed factory activity growth slowed in April from a month earlier as supply bottlenecks hit production.