China’s exports failed to sustain the previous month’s spike in April even as its imports dropped more than expected, according to official data published Sunday. The reversal in the brief recovery of exports, in particular, points to a sustained weakness in external demand and tempers hopes of a recovery in the world’s second-largest economy.
In April, exports fell 1.8 percent year-on-year in dollar terms after rising 11.5 percent in March, when a favorable comparison with year-earlier figures was cited as the reason for the surge. Exports to the U.S. — China’s largest trading partner — also dropped 9.3 percent year-on-year in April.
“There is little hope of a recovery in external demand,” Commerzbank economist Zhou Hao told the Wall Street Journal. “China is on its own.”
Imports, meanwhile, dropped 10.9 percent from a year earlier in April after falling 7.6 percent in March, suggesting that China is still struggling to boost weak domestic demand.
“Component imports are soft, suggesting a dim outlook for manufacturing output and exports in the near term,” Moody Analytics reportedly wrote in a note.
Analysts polled by Reuters had forecast an export drop of 0.1 percent on-year in April, and a decline in imports at a yearly rate of 5 percent. China’s trade surplus in April, however, topped estimates and came in at $45.56 billion — up from $29.86 billion in March and above a forecast of $40 billion.
The latest batch of trade data will do little to ease concerns of investors already worried about the stability of the world’s second-largest economy. Over the past few months, as China tries to move away from an export dominated economy to one built on robust domestic consumption, several key indicators have painted a mixed picture of the health of the country’s economy.
For instance, while the Caixin/Markit Manufacturing Purchasing Managers’ index — a key gauge of factory activity — showed that sector had contracted for a fourteenth straight month in April, the official PMI showed that activity in the sector expanded, albeit at a slower-than-expected pace. Even in March, most official data remained upbeat, despite the country’s gross domestic product growth slowing to a seven-year low in the first quarter of 2016.
“The fluctuations indicate the economy lacks a solid foundation for recovery and is still in the process of bottoming out. The government needs to keep a close watch on the risk of a further economic downturn,” He Fan, chief economist at Caixin, reportedly wrote in a note.