April Foreign Trade Data Review: Why Imports And Exports Exceeded Expectations?

In April 2020, China's exports (dollar denominated) rose further from -6.6% in March to 3.5%, while imports fell further from -1% in March to -14.2% compared with March, and the trade surplus increased from US $19 billion 930 million in March to US $45 billion 340 million (chart 1). Export figures were stronger than expected, while import data were weaker than expected.

On the export side, combined with the export orders data of PMI and our grassroots research, the export orders in April were down sharply. However, China's exports to the US, Europe, Japan and South Korea showed a marked recovery. We believe that the reasons why exports exceed expectations are:

First of all, export data in April may continue to reflect orders before the outbreak of overseas outbreaks, which is a reflection of China's production and rehabilitation. There are two evidences:

1) the growth rate of import and export of China's processing trade is usually fluctuating synchronously. Since June 2019, there has been a relatively large deviation between the two. From December 2019 to March 2020, the growth rate of import of processing trade has been positive and significantly higher than the export growth rate, which can be understood as the preparatory import of intermediate goods, while the slowdown in processing trade imports and the acceleration of exports in April should reflect the lag of products. Exit.

2) in 2008, China's PMI export orders index fell sharply in October, while the sharp decline in the year-on-year growth rate of exports occurred in November. This does not indicate a stable lead lag relationship between the two, but at least indicates that there may be some lag in the reaction from orders to export data (Chart 4). In particular, the import and export volume of China has fluctuated considerably over the same month, and single month data can not be used as a basis for judging the trend.

Secondly, exports of some products (such as epidemic prevention materials, IT and agricultural products) increased rapidly. Exports of textiles (mainly masks) and automatic data processing equipment increased sharply in the main export products, while the exports of integrated circuits and agricultural products also maintained a positive growth. Two. Both IT and agricultural products are affected by the epidemic, which constitute a certain support for exports.

Finally, ASEAN and the "belt and road" countries continue to play the role of the basic export market. In April, except for Europe, America, Japan and South Korea, ASEAN and Hongkong, China's exports to China increased by 5.06% compared with the same period last year. As of March, China's export growth to the "one belt and one way" country has climbed to 55.7%, much higher than the overall export growth rate.

In terms of imports, the import decline in April was mainly caused by the negative import from other regions, which caused a great drag on import year-on-year, while imports from Europe, America, Japan, South Korea, ASEAN and Hongkong were all improved. This shows that the decline of imports should not be due to weaker domestic demand, but also to the dislocation of import and export of processing trade. Changes in the quantity of major imports also showed a certain differentiation. In April, China imported edible vegetable oil, iron ore, copper and pulp, and the growth rate of imported cars and refined oil was relatively low. The demand for industrial raw materials should have entered the recovery stage. In April, international commodity prices continued to decline rapidly, and the RJ/CRB commodity price index fell further by 13.5%.

In conclusion, the stronger export figures in April reflect the rapid recovery of China's production, and we must not underestimate the significant drag on exports from overseas outbreaks. The weaker than expected import figures in April are related to the price factors and the rapid growth of imports before the processing trade, and do not reflect the sluggish domestic demand. Exports were the core factors affecting China's economy in the two quarter.