China’s Trade Surges on Strong Global Demand, Commodity Boom

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China’s Trade Surges on Strong Global Demand, Commodity Boom
Bloomberg News
May 7 2021

China’s exports rose more than expected in April and imports climbed, reflecting strong domestic and international demand and surging commodity prices.

Exports grew 32.3% in dollar terms in April from a year earlier, while imports soared 43.1%, the customs administration said Friday. That left a trade surplus of $42.85 billion for the month. Economists had forecast that exports would increase by 24.1% while imports would gain by 44%.

Key Insights
  • Global appetite for Chinese goods remained strong in the month, thanks to stimulus packages introduced by developed economies and reliance on China as world’s biggest exporter.
  • Imports climbed due to last year’s low base as well as strong domestic demand fueled by the economy’s recovery, and higher commodity prices.
  • At the Communist Party’s Politburo meeting last week, China’s top leaders pledged to accelerate the recovery in domestic demand. Leaders also reiterated there would be “no sharp turn” on economic support, as the recovery is neither even nor solid.
  • “Looking beyond the pandemic, we think China will continue to rebalance in order to rely more on domestic demand in the longer term and while gradually upgrade itself in the global supply chain,” Liu Peiqian, a China economist at Natwest Group Plc., wrote in a note before the data was released.

 

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China posts rapid trade growth in April as recovery races ahead

May 7, 20211:22 PM CST

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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 U.S. economic recovery 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% from a year earlier to $263.92 billion, China's General Administration of Customs said on Friday, beating analysts' forecast of 24.1% and the 30.6% 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 U.S. 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 push the yuan and stocks in China and other Asian markets higher.

Imports were also impressive, rising 43.1% from a year earlier, the fastest gain since January 2011 and picking up from the 38.1% growth in March. It was also slightly faster than the 42.5% rise tipped by the Reuters poll, 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 policy support.

"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%, which is not that strong."

Indeed, import volumes for some products are starting to level off. China's iron ore imports fell 3.5% in April from a month earlier, while copper imports dropped 12.2% on the month.

China's trade surplus of $42.85 billion was wider than a $28.1 billion surplus tipped in the Reuters poll.

 
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