China Exports Unexpectedly Fall in April

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The FINANCIAL — Chinese exports unexpectedly fell in April in the face of weak global demand and a stronger currency, the latest sign of slower growth in the world’s second-largest economy, according to Nasdaq.

China’s exports fell 6.4% from a year earlier in dollar terms, after a drop of 15% in March, data from the General Administration of Customs showed on May 8. The result was well below the median forecast of a 2.5% increase by 13 economists in a survey by The Wall Street Journal.

 Some economists said the data pressures leaders in Beijing to continue their efforts to rekindle slowing growth. “This is obviously worse than expected,” said Macquarie Group economist Larry Hu. “This is another pretty weak data point so far this year, so policy stimulus will continue for sure.”

Mr. Hu said he expects at least one broad interest rate cut and a cut in bank reserves in coming months.

Imports in April slipped 16.2% from a year earlier, compared with a 12.7% drop in March, Customs said. That also was worse than expected, pushing up China’s trade surplus to $34.1 billion from its $3.1 billion level in March.

Asian markets remained positive but gave up some gains after the data release. Shanghai’s benchmark stock index was up 1.1% midmorning May 8 and Hong Kong’s Hang Seng Index was up 0.7%.

The trade figures are the latest sign of weakness in China’s economy. In the first quarter, China’s gross domestic product expanded by 7% year from a year earlier, its slowest pace in six years. And despite recent monetary easing, industrial profits are down, monthly factory prices have been falling for more than three years and the real-estate market continues to swoon.

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“There’s no sign of notable improvements in the domestic and global economies,” said Standard Chartered economist Shuang Ding.

Economists said the relative strength of the yuan has also hurt Chinese exporters. Since China and Hong Kong’s currencies are tied to the strong U.S. dollar, they have risen faster than many other Asian currencies. DBS Bank says the Chinese yuan and Hong Kong dollar have appreciated 13% against a basket of currencies that includes the dollar, yen and euro since mid-2014. By comparison, 10 other Asian currencies are 7.7% stronger on average.

As exports have weakened in line with other parts of the economy, Beijing has tried to prop up outbound shipments with tax reductions, streamlined procedures and easier export rebates.

Daniel Wang, general manager of a Shanghai-based pharmaceuticals trading company that exports antibiotics to Africa and the Middle East, said higher component costs have hurt his business. “Some of the foreign clients now go to India to buy drugs as they see a price rise here in China,” he said.

Mr. Wang added that government efforts to cut red tape haven’t materialized at the ground level. “The tax refund process is just too complex. I don’t expect the government to do much about it,” he said.

“I am not optimistic about the future because the competition is so fierce now and everything is getting more expensive here,” he added.

Liyan Qi and Lilian Lin contributed to this article.


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