China exports regain some strength on US, EU demand

Monday, 12 May 2014 00:03 - - {{hitsCtrl.values.hits}}

Reuters: China’s exports and imports returned to slight growth in April as orders to the United States and European Union surged, offering some positive signals for the world’s second-largest economy after a weaker-than-expected start to 2014. Analysts said the trade picture was better in April than Thursday’s data suggested, as export figures last year had been inflated by fake invoices before a mid-year crackdown by authorities.

“The external demand side is not such a big problem for China now because the genuine recovery is there,” said Wei Yao, China economist at Societe Generale in Hong Kong. “This is actually offering some support to China’s growth.” Exports rose 0.9% in April from a year earlier, following falls of 6.6% in March and 18.1% in February, the General Administration of Customs said. "China’s economy grew at its slowest pace in 18 months in the first quarter, and a Reuters poll shows analysts expect growth of 7.3% in 2014, the weakest in 24 years " Imports grew 0.8% from a year ago, after an 11.3% fall in March, to produce a trade surplus of $ 18.5 billion, more than double the $ 7.7 billion surplus in March. All three figures bettered the median forecasts in a Reuters poll, with exports and imports defying expectations of another fall. The pick-up in trade follows a batch of factory surveys for April, after the government unveiled targeted measures to support growth, though both the official and private measures showed export orders had fallen. Last week, Beijing said it would offer quicker tax rebates for exporters and encourage more high-tech equipment and consumer goods imports to support trade. Export growth was largely driven by demand from developed economies. Shipments to the United States jumped an annual 12% in April, a sharp pick-up from a rise of 1.2% in March and a drop of 11.3% in February. Exports to EU surged 15.1% last month, compared with 8.8% growth in March and a 14.4% drop in February.Emerging markets, including in Southeast Asia, lagged. Exports to ASEAN countries rose 3.8%, slowing from double-digit growth in previous months, and shipments to Brazil ticked up 3.7% from a year earlier. The trade data is expected to more accurately reflect actual activity from mid-year, following last year’s crackdown on fake trade receipts that were used to evade foreign exchange restrictions. Those fake invoices have created a high base for export figures which is understating their performance this year, and the distortion is expected to fade after May. “China’s trade data show signs of recovery but continue to understate the true health of the export sector,” said Julian Evans-Pritchard, China economist at Capital Economics, in a note to clients. However, some analysts cautioned that did not mean exports were set for a steep recovery, given the weak demand from emerging economies. “Trade is still quite weak. The G3 market is doing well but the emerging market -- Asia -- is still struggling,” said Kevin Lai, economist at Daiwa in Hong Kong. The government has set a target of 7.5% growth for exports and imports this year. China missed its targets of 8% in 2013 and 10% in 2012, and some analysts and officials think this year’s goal could also be tough to reach. China’s economy grew at its slowest pace in 18 months in the first quarter, and a Reuters poll shows analysts expect growth of 7.3% in 2014, the weakest in 24 years.

Emerging markets output growth rises slightly in April: HSBC survey

Reuters: Business activity across emerging markets expanded slightly in April following four months of declining growth, but output fell in all the BRIC emerging economies, a survey showed on Thursday. HSBC’s composite emerging markets index of manufacturing and services purchasing managers’ surveys edged up to 50.4 from 50.3 in March, but remained well below its long-run trend level of 53.9. The data showed declining output in the four largest economies, Brazil, Russia, India and China - below the 50 threshold that marks the difference between expansion and contraction. Based on data from purchasing managers at about 8,000 firms in 17 countries, the survey showed manufacturing output across emerging markets was broadly stagnant in April, while services activity growth was unchanged from March’s weak rate. “Big economies from Russia, Turkey, Poland to South Africa all lost momentum,” said Murat Ulgen, HSBC chief economist for central and eastern Europe and sub-Saharan Africa, in a statement. The future output index, which tracks firms’ expectations for activity in 12 months’ time, fell to a new low in April, mainly reflecting a sharp weakening in output expectations in Brazil and Mexico and the weakest sentiment in China in 2014 so far. The HSBC index is calculated using data produced by Markit.