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China’s Trade Unexpectedly Rises

Photographer: Tomohiro Ohsumi/Bloomberg

A container ship leaves the Yangshan Deep Water Port in Shanghai, China. Close

A container ship leaves the Yangshan Deep Water Port in Shanghai, China.

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Photographer: Tomohiro Ohsumi/Bloomberg

A container ship leaves the Yangshan Deep Water Port in Shanghai, China.

China’s exports and imports (CNFRIMPY) unexpectedly rose in April, helping leaders put a floor under a slowdown in the world’s second-biggest economy.

Overseas shipments increased 0.9 percent from a year earlier, when figures were inflated by fraudulent invoicing, data from the Beijing-based customs administration showed today. That compared with the median estimate for a 3 percent drop in a Bloomberg News survey of analysts. Imports gained 0.8 percent, leaving a trade surplus of $18.46 billion.

The figures and a report showing Australia added more jobs than projected in April increased signs of improving global expansion, following stronger-than-estimated U.S. employment numbers last week. Export gains would reduce the urgency for Communist Party leaders to resort to larger-scale stimulus than railway spending and tax breaks, after first-quarter growth slowed to the weakest pace in six periods.

“The signs of improvement in Chinese exports are clear,” said Ding Shuang, senior China economist with Citigroup Inc. in Hong Kong. Shipments may rise by close to 10 percent this month, and stronger growth “will create pressure for China to reverse the recent yuan depreciation,” said Ding, who formerly worked at the People’s Bank of China and International Monetary Fund.

The yuan, which is down about 2.8 percent this year against the U.S. dollar, reversed losses after the report to advance 0.1 percent as of 3:11 p.m. local time. The benchmark Shanghai Composite Index (SHCOMP) rose 0.3 percent at the close, while the Australian dollar strengthened 0.6 percent.

Data Distortions

China’s trade data have been distorted this year after figures in early 2013 were inflated by falsified invoices used to disguise capital flows, triggering a government crackdown on the practice. April may mark the final month of the distortions and May data will compare with what Royal Bank of Scotland Group Plc economist Louis Kuijs has said were “pretty clean” numbers in the same period last year.

Underlying export growth accelerated to 6.7 percent in April from 3.5 percent in March after adjusting for over-invoicing issues, Kuijs said, revising a preliminary estimate of 8 percent earlier today. Import gains were “subdued,” reflecting slow demand expansion in China, Kuijs wrote in a note.

April exports have shown “obvious improvement,” Zheng Yuesheng, spokesman for the customs administration, said on state television today. “The external environment for China’s foreign trade is improving,” Zheng said. “The effects of an inflated comparison base in the same period last year are weakening.”

Analyst Estimates

Exports fell 6.6 percent in March from a year earlier and plunged 18.1 percent in February, the biggest drop since the global financial crisis, based on previously released data. Estimates for April from 47 economists ranged from a drop of 7.5 percent to an increase of 3.6 percent.

Imports compared with a median estimate for a 2.1 percent decline from analysts surveyed by Bloomberg News, with forecasts ranging from a drop of 11 percent to an increase of 5.8 percent. The trade surplus was projected to be $16.7 billion.

Exports to the U.S. rose 12 percent from a year earlier, the most since November, based on customs data compiled by Bloomberg. Shipments to the European Union advanced 15.1 percent and those to South Korea were up 13.5 percent.

In contrast, exports to Hong Kong, the main destination in last year’s over-invoicing, slumped 31.4 percent after a 43.6 percent drop in March.

Rates Unchanged

Central banks in Indonesia, Malaysia (MAOPRATE) and the Philippines are all projected to leave interest rates unchanged today, according to Bloomberg surveys, as the need to stimulate growth fades, allowing policy makers to guard against inflation. Indonesia’s central bank said last month it will maintain a tight policy stance in 2014, and a minority of economists surveyed expects Malaysia and the Philippines to raise borrowing costs today.

China will implement measures to stabilize the country’s “severe and complicated” foreign-trade situation, the cabinet said last week. The government will accelerate the development of cross-border e-commerce, streamline trade processes, reduce the types of merchandise that require inspection and improve trade financing, according to a State Council statement.

Policy makers’ efforts to rein in credit, pollution and property prices are projected to help push down annual expansion to a 24-year low. The economy will grow 7.3 percent this year, according to the median estimate of 57 analysts surveyed in April, compared with a target of about 7.5 percent.

Property Drag

Nomura Holdings Inc. said the trade figures held “few surprises” and reiterated a forecast for economic expansion to slow to 7.1 percent in the April-to-June period. “The property sector correction has begun and its drag on growth could snowball” this quarter, Zhang Zhiwei, chief China economist in Hong Kong, said in a note.

Finance Minister Lou Jiwei reiterated this month that the nation won’t use short-term, large-scale stimulus. China will support growth through measures including deregulation and the development of service industries, Lou said at a meeting of Asian finance ministers and central bankers in Kazakhstan.

The export data are “somewhat inconsistent with the weakness seen in new export orders” in purchasing managers’ indexes from the government and HSBC Holdings Plc, said Barclays Plc analysts led by Chang Jian, chief China economist in Hong Kong.

Import figures “suggest still-resilient domestic demand and likely corporate stocking of raw materials on low commodity prices,” Chang wrote in a note.

Hangzhou-based carmaker Zhejiang Geely Holding Group Co., whose exports declined in the first quarter, estimated a 15 percent increase in shipments last month from a year earlier on demand from new markets, Zhang Lin, vice president of the company, said in an interview in April.

To contact Bloomberg News staff for this story: Xiaoqing Pi in Beijing at xpi1@bloomberg.net; Xin Zhou in Beijing at xzhou68@bloomberg.net

To contact the editors responsible for this story: Arran Scott at ascott101@bloomberg.net Scott Lanman, Nerys Avery

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