China: Exports bounce on base effects - ING

Iris Pang, economist at ING, notes that the Chinese exports jumped 14.2% year-on-year in March after falling 20.8% YoY in February, mostly due to base effects.

Key Quotes

“Imports continued to shrink further, falling 7.6% from a 5.2% drop a month ago, partly due to lower imports from the US compared to a year ago.”

“To minimise the seasonal effect, we prefer to look at the first three months as a whole. Exports in 1Q grew 1.4% YoY while imports shrank 4.8% YoY. Trade with the EU was 15.8% of total trade while the US was 11.6%. If there is a trade deal between China and the US, Chinese imports from the US will likely increase. But for 1Q19, imports from the US fell 8.5%.”

“Early signs from China's official manufacturing PMI's export order showed an uptick in March to 47.1 from 45.2 in February, but the reading was still below 50, i.e. still shrinking, which suggests that exports will only improve slightly in the near future.”

“We don't think the yuan will help to support net exports if new export orders are falling. In fact, we don't think the yuan will be used this way in 2019.”

“Our forecast remains at 6.75 for the USDCNY by the end of 2019.”