China’s trade slump eases in March
BEIJING: The plunge in China’s exports and imports eased in March as factories resumed production, but shipments are set to shrink sharply over coming months as the coronavirus crisis shuts down many economies and puts the brakes on a nearterm recovery.
Financial markets breathed a sigh of relief after customs data yesterday showed overseas shipments fell 6.6 percent in March year-on-year, improving from a 17.2 percent slide in January-February, as exporters rushed to clear a backlog of orders after forced production shutdowns.
Economists had forecast shipments to drop 14 percent from a year earlier. Yet, while the trade figures were not bad as feared, analysts say the export and overall growth outlook for the world’s secondbiggest economy remains grim as the pandemic has brought business activity across the globe to a standstill.
“The above-expectation March trade figures do not mean that the future is carefree,” said Zhang Yi, Beijing-based chief economist at Zhonghai Shengrong Capital Management. Zhang said he expects firstquarter gross domestic product data on Friday will likely show a contraction of 8 percent - the first quarterly slump since at least 1992. Analysts’ forecasts for China’s first quarter GDP ranged widely between a contraction of 2 percent and 16 percent. “A decline in exports throughout the second quarter has been the market consensus now and a drop of 20 percent or more is a highprobability event. For policymakers, more policies should be rolled out to address the possible societal issues stemming from mass-scale unemployment,” Zhang said.
The data showed imports slid 0.9 percent from a year earlier, also above market expectations of a 9.5 percent drop, which the customs attributed to improving domestic demand. They had fallen 4 percent in the first two months of the year. The better imports picture partly reflected shipments that were stuck in ports being cleared and catch-up demand as authorities eased restrictions. Yet, domestic consumption was far from robust with key imports such as iron ore dipping in March, underlining the broad economic strains. “Imports should hold up better given that domestic demand looks set to stage a further recovery in the coming months,” said Julian EvansPritchard, senior China economist at Capital Economics.
“But the quarter of China’s imports that feed into China’s export sector will continue to fall and hold back the recovery in imports.” The overall trade surplus last month stood at $19.9 billion, compared with an expected $18.55 billion surplus in the poll and a deficit of $7.096 billion in January-February.
Stock markets in Asia extended their gains after China’s trade report, while risk sensitive currencies including the Australian and New Zealand dollars as well as the pound pulled ahead, mainly on relief on the less gloomy data.
Jobs, income pressured
China, where the novel coronavirus first emerged late last year, has reported 82,249 infections and 3,341 deaths as of April 13. Worldwide, infections have surpassed 1.8 million with over 119,000 deaths. The pandemic’s sweeping impact on businesses and consumers has triggered an unprecedented burst of stimulus from policymakers in the past two months, with the World Trade Organization forecasting that goods trade would shrink more steeply this year than during the global financial crisis.
Beijing is trying to restart its economic engines after weeks of near paralysis to contain the pandemic that had severely restricted business activity, flow of goods and the daily life of people. But as the virus rapidly spread to almost all of China’s trading partners, severely restraining overseas demand particularly in European and US markets, Chinese factories’ export orders have been scrapped. Many privately-owned exporters have been forced to fire workers and warned about factory closures in not too distant future. — Reuters