China April trade balance beats estimates but overall trade falls

Strong exports led to a larger than expected Chinese trade balance in April.

The customs bureau reported a $45.56B trade surplus compared to $38.4B expected.

Exports fell 1.8% versus April 2015 in US dollar terms; economists were forecasting something between a flat reading and a 3.0% decline.

It comes on the heels of an 11.5% y/y rise in exports in March.

The numbers suggest a continued soft global economy and compound a precipitous drop in exports early in the year. In the Jan-April period, overall exports are down 7.6% y/y.

The incoming side raises larger questions. Imports fell 10.9% y/y in April compared to a 5% decline expected. That follows a 7.6% decline in March. Imports are now down 12.8% y/y in the collective Jan-April period.

The softness in Chinese imports reflects the slowdown in domestic construction, infrastructure and other capital spending. It may also show that Chinese factories don't anticipate high future manufacturing orders so they're keeping inventories lean. That's a worrisome sign.

Details:

  • Oil imports 32.58m tonnes vs 32.61m tonnes in March
  • Aluminum 400K tonnes vs 420K tonnes in March
  • Copper imports 450K tonnes vs 570K tonnes in March

Overall, the better trade surplus will be good for headline Chinese GDP but it's for all the wrong reasons as imports fall faster than exports. Still, I don't expect these numbers to cause any special concern in markets on Monday.