China's foreign trade grew 8.9% in April in yuan terms, slowing down from March, but still showing recovery and beating expectations. The export sector reported a double-digit growth rate of 16.8% during the month. Imports, however, slipped by 0.8% year-on-year, which showed that domestic demand is still recovering, observers said. China's trade has grown by 5.8% year-on-year to about CNY13 trillion in the first four months, an acceleration from a 4.8% growth in the first quarter. China's exports in April slowed from a 23.4% growth in March, but increased significantly faster compared with the 0.9% growth in the first two months.
Hu Qimu, Deputy Secretary General of the digital real economies integration Forum 50, told the Global Times: “I think that the trade situation is a reflection of China's supply chain resilience. That is to say, China has pressed the brake on its production sector last year as a result of Covid. Now that the brake is lifted, production has rebounded faster than demand”. “I don't think the exports growth slowdown in April is a reflection of a reverse in China's promising trade trend," he said, adding that the trade sector's general trend is still positive, particularly judging by a few niches which prove that China's trade structure is upgrading. According to customs data, China's outward processing exports rose by 207% year-on-year in the first four months. Hu said that this shows China is increasing exports of core parts to neighboring Asian countries for labor-intensive processing. China is increasingly reducing reliance on low-cost processing and its competitiveness is rising in the manufacturing sector.
China's trade with Association of Southeast Asian Nations (ASEAN) economies rose by 13.9% to CNY2.09 trillion in the January to April period, while trade with the U.S. dropped by 4.2%. The share of China-U.S. trade dropped to 11.2% of China's total foreign trade volume from 12% in 2022. The U.S. remained China's third largest trading partner, behind ASEAN and the EU. China's exports to the U.S. totaled CNY1.09 trillion, down 7.5% year-on-year; while imports from the U.S. totaled CNY410 billion, up 5.8%. However, many U.S. businesses acknowledge that the Chinese market is indispensable, especially for advanced technologies. John Neuffer, President and CEO of the U.S. Semiconductor Industry Association, said that China is still “our biggest market” and “we need to play in that market.” China is the biggest semiconductor market in the world. It is in no party's interest to push for “decoupling” from China, sever supply chains and disrupt the market, Chinese Foreign Ministry Spokesperson Mao Ning said, as reported by the Global Times.
“It seems increasingly clear that the global economic slowdown is weighing on China’s exports,” said Iris Pang, Chief Economist for Greater China at ING. “Falling imports – an input for future exports – suggest that a further deterioration of exports in the coming months is highly likely and the government will step in to support the manufacturing sector’s labor market through fiscal stimulus.” The weak trade data is consistent with April’s official manufacturing purchasing managers’ index, which fell to 49.2 having remained above the 50-point mark separating expansion and contraction for the first three months of the year. Exports to the European Union also continued to grow in April, increasing by 3.87% year-on-year, while imports from the bloc fell by 0.12%. Exports to Russia rose by 153% in April, while imports rose by 8%, the South China Morning Post adds. China's exports to Russia were up 67.2% to USD33.69 billion in the first four months, while imports from Russia grew by 24.8% to USD39.46 billion, extending the rapid growth trend in the first quarter of 2023.
