China April Exports Unexpectedly Contract, Imports Slide More Than Forecast
Beijing. China’s exports unexpectedly fell 6.4 percent in April from a year earlier, while imports tumbled by a deeper-than-forecast 16.2 percent, fueling expectations that Beijing will quickly roll out more stimulus to avert a sharper economic slowdown.
April imports tumbled 16.2 percent from a year earlier, following a 12.7 percent drop in March that highlighted tepid domestic demand as the world’s second-largest economy slows.
That left the country with a trade surplus of $34.13 billion for the month, the General Administration of Customs said on Friday.
Analysts polled by Reuters had expected exports to rise 2.4 percent in April from a year earlier, and predicted imports would fall 12 percent.
“This is bad. I expect an interest rate cut this weekend,” said economist Tim Condon at ING in Singapore.
“This is going to make 7 percent [GDP] growth hard to attain. It looks like the weakness in the first quarter wasn’t transitory. It’s persistent.”
Chinese Vice Premier Wang Yang was quoted by Xinhua state news agency as saying last month that authorities must arrest China’s export slowdown lest it further dampen economic growth.
The central bank has lowered interest rates and banks’ reserve requirement ratio thrice in three months since November in a bid to stoke the economy, and most analysts had already expected it to loosen policy again on both fronts in coming months.
Buffeted by lukewarm foreign and domestic demand, China’s trade sector has wobbled in the past year, adding to pressure on the slowing economy and unsettling policymakers.
Earlier this week, China’s trade minister said the devaluation of currencies by some countries has led to sharp gains in the yuan, hurting the competitiveness of Chinese exports.
The yuan has gained against major non-dollar currencies in recent months, leading to its rise on a trade-weight basis.
But Premier Li Keqiang has ruled out a devaluation, even as the economy faces headwinds.
While some exporters said they have not felt the impact of a rising yuan, thanks in part to the growing popularity of currency hedging options, few doubt that sales would suffer in coming months if the yuan sustains its ascent.
China’s trade grew 3.4 percent in 2014, missing the government’s growth target of 7.5 percent by more than half.
The government has lowered its growth target for 2015, with combined imports and exports expect to rise by around 6 percent.
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Source: The Jakarta Globe