Slowdown in China imports


China's headline growth in imports unexpectedly stalled in April and exports were weaker-than-expected, raising doubts about the strength of the rebound in the world's second-biggest economy.

The trade data was the first of a flurry of economic indicators to be released this week - inflation, producer prices, industrial output, fixed asset investment and retail sales are all due tomorrow - which had been expected to show a month-on-month improvement in both foreign and domestic demand.

Annual growth in imports last month was just 0.3 per cent, weaker than the 5.3 per cent year-on-year rise in March. However, the slowdown in headline imports was magnified by a sharp fall in commodities prices in the past year.

Exports were also softer than expected, growing by 4.9 per cent in April from a year earlier, compared with a forecast of 8.5 per cent and March's rise of 8.9 per cent.That left the country with a trade surplus of $18.4 billion in April, compared with a forecast of $8.5 billion and March's $5.35 billion.

Commerce minister Chen Deming said last week that the April trade surplus would be around $10 billion.

Trade figures from the second quarter tend to give a clearer picture of the emerging trend for the year, given the volatility in first-quarter numbers distorted annually by shifts in the Lunar New Year holidays.

Hurt by a recession in Europe and a patchy economic recovery in the United States - China's two biggest trading partners - export growth has slumped to single-digit levels this year, a long way from growth of more than 20 per cent seen in 2010.

To cope with the slowdown, China has tilted policy away from containing inflation and towards supporting growth. Beijing has been aiming for its total trade to grow at an average annual pace of 10 per cent in the years between 2011 and 2015.

China has followed a programme of "fine-tuning" of economic policy since the autumn, tweaking taxes and licence fees and cutting the amount of cash banks are required to hold in reserves to keep credit creation in line with the official 14 per cent target for money supply growth.

Despite those efforts, China is still likely to see its slowest year of economic growth in a decade in 2012, according to the consensus forecast of 8.4 per cent.

China's manufacturers had shown signs of improvement in April, with export orders ticking up and output gathering pace among bigger plants in the country's vast factory sector, according to surveys of purchasing managers last week.

But the just-concluded Canton Fair, a bi-annual export trade fair widely considered a barometer of China's export growth, saw the value of signed export deals shrink 2.3 per cent from a year ago, the first annual drop since the global financial crisis, which has fanned worries over the strength of world demand.

China's export sector dragged on the economy in the first quarter of 2012, with net exports subtracting 0.8 percentage points from GDP, which grew at its slowest annual rate in nearly three years at 8.1 per cent.