China Exports Stabilized in April Amid Weakness in Currency

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  • Shipments rose 4.1% in yuan terms, fell 1.8% in dollar terms
  • Imports in yuan terms extended declines to 18 straight months

China’s exports stabilized in April as the value of the currency decreased, while imports extended a streak of declines to 18 months.

Overseas shipments rose 4.1 percent in yuan terms from a year earlier yet fell 1.8 percent in dollar terms, the customs administration said Sunday. Imports slumped 10.9 percent in dollars to leave a trade surplus of $45.6 billion.

"China’s exports stayed positive in April, but with gains flattered by yuan depreciation," Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a note. "Policy makers will likely remain in wait-and-see mode before deciding on further stimulus."

April’s exports follow a March surge in both currencies, which may have been exaggerated by seasonal effects after the Lunar New Year holiday. The absence of a sustained trade rebound adds to pressure for more government stimulus to help boost growth, which economists project will slow this year to a fresh quarter-century low of 6.5 percent.

Cumulative data for the year showed exports are weakening. Shipments declined 2.1 percent in yuan terms in January to April versus the same period a year earlier, while slumping 7.6 percent in dollar terms, the China customs administration reported Sunday.

The decrease suggests more challenges loom for policy makers as global demand remains too weak to fuel a sustainable pickup in economic growth. A surge in March, helped by a seasonal effect and a low base last year, may be a blip.

March exports jumped 11.5 percent in dollar terms, the most in a year, and import declines narrowed. The jump was due to recovering global demand and a low comparison base versus last year, Sheng Laiyun, a spokesman for National Bureau of Statistics, said last month. He said he expects positive change in exports as the global economy recovers.

"China’s data improvement in March is short-lived," said Zhou Hao, an economist at Commerzbank AG in Singapore. "The market has to prepare a little bit for the downside risk in other Chinese data and some sort of market correction might be inevitable," he said, adding that monetary policy is likely to remain accommodative.

April’s oil imports by the world’s biggest consumer after the U.S. rebounded amid strong buying by independent refiners that have helped push the country’s crude demand to a record. Inbound shipments totaled 32.58 million metric tons, customs data show. That’s equivalent to 7.96 million barrels a day, near the 8.04 million record in February.

Steel exports decreased last month as local prices and demand surged, curbing the incentive for mills in the top producer to seek overseas sales. Still, the April figure took exports over the first four months to 7.6 percent more than a year earlier, customs said.

Copper imports slumped in April from a record the previous month after swelling stockpiles in the world’s biggest user discouraged purchases. In the first four months, the imports totaled 23 percent more than the same period a year earlier.

China’s currency has been moving in virtual lockstep with the weakening dollar versus major peers this year, providing policy makers with a veneer of stability and exporters with a boost to earnings. The yuan has been little changed against the greenback in 2016 while an index that measures its performance against the exchange rates of 13 trading partners has dropped 4.3 percent to the lowest since 2014.

The market’s confidence in the yuan has strengthened as April data showed a rebound across several indicators and the Federal Reserve signaled it will hold off on rate hikes. That helps ease pressure on China’s foreign-exchange reserves, the world’s largest. The hoard rose slightly to $3.22 trillion last month, the People’s Bank of China said Saturday.

The Chinese central bank reiterated on Friday it wants to keep the yuan stable, according to its first-quarter monetary policy implementation report.

— With assistance by Xiaoqing Pi

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