China is expected to report much slower export growth for April after a strong rebound in March, while imports likely shrank for a fifth straight month but at a milder pace, a Reuters poll showed.
If Wednesday’s readings are in line with forecasts, they could reinforce views that the economy lost some growth momentum at the start of the second quarter, as suggested by softer factory activity gauges last week.
But hopes for a modest China export recovery in the second half of the year may have been turned on their head on Monday, after US President Donald Trump said he would hike tariffs on Chinese goods this week and target hundreds of billions more, escalating tensions between the two sides.
“The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!” Trump said in a tweet, sparking fears that trade talks may be unraveling. As recently as Friday, he had said progress was being made.
China’s exports in April are expected to have risen 2.3% from a year earlier, according to the median estimate of 24 economists in a Reuters poll, cooling from a 14.2% rise in March.
Some economists believe the unexpected strength in March was mainly due to temporary distortions including seasonal factors and changes in exporters’ and importers’ activity ahead of a cut in the value-added tax (VAT) on April 1.
Global demand still appears sluggish, with factory surveys pointing to softer export orders in April, due in part to continued business uncertainty as the US-China trade war drags on.
The total value of export orders signed at China’s biggest trade fair last month fell slightly from a year earlier.
Import data is expected to show China’s domestic demand also remains weak, but a more modest drop is forecast for April, suggesting that a flurry of government growth-boosting measures since last year are starting to have a more noticeable effect.
Economists predict April imports fell 3.6% from a year earlier, narrowing from the previous month’s 7.6% decline. Higher global prices for commodities such as oil and iron ore may also have provided some cushion to import readings, economists at Bank of America Merrill Lynch (BAML) said.
In March, Beijing announced billions of dollars in additional tax cuts and infrastructure spending as it looked to put the economy back on more solid footing after growth last year slowed to a near 30-year low. The economy defied expectations for a further slowdown in the first quarter, growing at a steady 6.4% pace. March data also was largely stronger than expected, raising hopes that conditions were starting to stabilize.
However, the latest factory surveys suggested the economy unexpectedly lost a step in April, indicating more policy support may be needed to ensure a sustainable recovery. China’s overall trade surplus is expected to have expanded to $35bn in April from $32.65bn the previous month, according to the Reuters poll.
“Beijing has been sounding less dovish over the past two weeks. We believe a worsening of the trade conflict between the US and China will evoke another dovish turn by Beijing, especially on its monetary easing stance,” analysts at Nomura said in a note.