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Financial News: China's Exports Expand Unexpectedly, Imports Fall

China's Exports Expand Unexpectedly, Imports Fall

05/07/2020 - 01:34:00 (RTTNews)

(RTTNews) - China's exports expanded in April despite the global outbreak of coronavirus, or covid-19, pandemic hurting global demand, data from the General Administration of Customs revealed Thursday.

In dollar terms, exports grew 3.5 percent on a yearly basis in April, confounding expectations for a decline of 12.1 percent. Shipments had declined 6.6 percent in March.

Meanwhile, imports plunged 14.2 percent on year versus the expected fall of 12.4 percent and March's 0.9 percent drop.

Consequently, the trade balance showed a surplus of $45.34 billion in April, which was well above economists' forecast of $9.7 billion. The surplus increased sharply from $19.9 billion in March.

However, Purchasing Managers' survey from IHS Markit on Thursday showed that China's new export orders in the service sector fell at the second-sharpest rate since the series began in September 2014 as many firms commented that the pandemic had resulted in temporary company closures and other restrictions across many export markets.

The service sector logged further falls in business activity and new work in April but rates of reduction eased from February. The services Purchasing Managers' Index rose to 44.4 in April from 43.0 in March. But a score below 50 indicates contraction.

The composite output index, which combines manufacturing and services, advanced to 47.6 in April from 46.7 in the previous month.

The second shockwave for China's economy brought about by shrinking overseas demand should not be underestimated in the second quarter, Zhengsheng Zhong, chairman and chief economist at CEBM Group, said.

"In April, the severe export shock on China's economy had a knock-on impact on household income and consumption, as well as business investment," Zhong said.

Zhong noted that as the recovery of domestic consumption was limited and increased infrastructure spending was not enough to offset the plunge in external demand, the country's economy continued to decline year-on-year.

The International Monetary Fund, in April, said China, where the Covid-19 pandemic started, is forecast to grow a moderate 1.2 percent this year, but rebound with a growth surge of 9.2 percent next year.

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