China exports return to growth in April amid signs of improving demand

SINGAPORE (ICIS)–China’s April exports rose by 1.5% year on year to $292.5 billion in April, reversing the 7.5% contraction in March supported by signs of improved global demand, customs data showed on Thursday.

• China posts $72.4bn April trade surplus, exceeding March
• Year-to-date trade balance slightly below 2023 levels
• SE Asia grows as key Chinese export destination; exports to the US, EU continue to decline

China’s imports rose by 8.4% year on year in April, reversing the 1.9% contraction in March, General Administration of Customs data showed.

This led to a trade surplus of $72.4 billion in April, up from the $58.6 billion surplus in March this year.

By export destination, the Association of Southeast Asian Nations (ASEAN) continued to grow in importance for China.

April exports to the region were up 20.4% year on year, bringing the year-to-date growth level to 6.3%.

Through the first four months of the year, ASEAN remained the largest export destination for China, accounting for 16.9% of total exports.

Exports to the US remained weak, falling by 1.6% year on year in April for a year-to-date decline of 1.0%.

Exports to the EU also struggled, down 3.3% year on year in April and contracting by 4.8% in the year to date.

“It remains to be seen if President Xi’s trip to Europe, where improving trade ties were emphasized, will help bring about a trade recovery in the coming months,” Dutch banking and financial information services provider ING said in a note.

China’s trade balance through the first four months of the year amounted to $255.7 billion, lower than the $266.0 billion in the same period of 2023.

In Chinese yuan (CNY) terms, which are more relevant for gauging GDP growth, the trade balance was CNY1,817.3 billion in the first four months of this year – slightly weaker than the CNY1,829.0 billion over the comparable period in 2023.

By export product, the performance of various categories remained uneven in January-April of this year, ING said.

Automobiles continued to see strong growth amid China’s strong competitiveness in the new energy vehicle sector, up 21.2% year on year.

The impact of auto sector price competition can also be seen in the export data; volume growth was even higher at 26.0% year on year on a year-to-date basis.

Household appliance exports have also been a surprising area of strength, up 12.6% year on year for the first four months of 2024.

“With domestic demand for household appliances likely to recover after the rollout of trade-in policies, the sector could see a recovery this year,” ING said.

“PMI data has shown export orders expanded for two consecutive months, which is a favorable sign, but we anticipate that global external demand conditions are likely to be relatively lukewarm at best this year.”

China’s manufacturing activity expanded for a second month in April amid improved overseas demand, but the rate of expansion weakened amid higher production costs.

China saw surprisingly strong economic growth in the first quarter, fueled by exports from its manufacturing sector.

The world’s second-largest economy expanded by 5.3% year on year in the first three months of 2024, accelerating from the 1.6% growth in the previous quarter.

A debt-ridden property market with declining home prices, coupled with weak consumer confidence and shrinking foreign demand, however, creates significant headwinds for China’s economic growth.

In response, Beijing is doubling down on industrial policy, prioritizing high-tech and green technology.

China has set an ambitious economic growth target of around 5% for 2024.

Focus article by Nurluqman Suratman

Thumbnail photo shows a port in Suqian, China. (Source: Costfoto/NurPhoto/Shutterstock)