BEIJING • An unexpected fall in China's exports and an equally unforeseen rise in imports show that the world's second-largest economy continues a tentative recovery, while global demand weakens and trade tensions re-escalate.
Exports dropped 2.7 per cent last month versus a forecast 3 per cent increase, while imports expanded by 4 per cent compared to a projected slip, the Customs administration said yesterday.
Those misses show the global slowdown is weighing down on China's growth, instead of the other way around, at least for now. Months of policy stimulus has fuelled a pick-up in the Asian economy, although the re-escalating trade threats may throttle those green shoots.
"The lacklustre exports show that the global economy probably hasn't bottomed yet, while the imports signal recovering domestic demand," said Ms Peiqian Liu, Asia strategist at Natwest Markets in Singapore. "The noise and uncertainties in the trade war will continue to weigh on China's trade."
China's shipments to the United States, Japan and South Korea slumped from a year earlier last month and those to the largest European economies slowed from a surge in March. The trade surplus with the US in the first four months this year expanded 10.5 per cent from the same period in 2018 to about 570 billion yuan (S$114.6 billion), as trade flows both ways declined.
While early data from Japan and the euro area show signs of stabilisation, US President Donald Trump's abrupt Sunday announcements that he planned to raise tariffs on US$200 billion (S$272 billion) of Chinese imports to 25 per cent from 10 per cent is throwing that outlook back into uncertainty. He threatened to impose duties "shortly" on all other goods not under tariffs.
A Chinese delegation led by Vice-Premier Liu He was scheduled to visit Washington for negotiations yesterday and today.
In an all-out trade-war scenario, annual gross domestic product may shrink by as much as 0.6 per cent in the US and by 1.5 per cent in China, according to the International Monetary Fund.
The tensions between the US and China are "a threat for the global economy", according to IMF managing director Christine Lagarde.
The flaring trade tensions will threaten China's outlook, which had been brightened by strong data in March following fiscal stimulus and credit easing since last year. The imported volume of crude oil, copper and coal increased from a year earlier in April.
Still, the import data may have been flattered by rising oil and iron ore prices. A tax cut announced this year may have prompted importers to delay shipments until after April 1, from when they can pay lower value-added taxes, according to chief China economist Lu Ting at Nomura Holdings in Hong Kong.
"There is real risk of double dip in growth and Beijing cannot afford to stop easing yet," Lu wrote in a note.