China posts rapid trade growth in April as recovery races ahead

China extended its impressive trade performance in April, with exports unexpectedly accelerating and import growth hitting a decade high, in a boost to the world's second-largest economy.

A brisk U.S. economic recovery and stalled factory production in other countries hit by coronavirus have propped up demand for goods made in China, analysts say.

Exports in dollar terms surged 32.3% from a year earlier to $263.92 billion, China's General Administration of Customs said on Friday, beating analysts' forecast of 24.1% and the 30.6% growth reported in March.

"China's export growth again surprised on the upside," said Zhiwei Zhang, chief economist at Pinpoint Asset Management, adding that two factors - the booming U.S. economy and the COVID-19 crisis in India, causing some orders to shift to China - likely contributed to the strong export growth.

"We expect China's export growth will stay strong into the second half of this year, as the two factors above will likely continue to favour Chinese manufacturers. Exports will be a key pillar for growth in China this year."

The numbers helped push the yuan and stocks in China and other Asian markets higher.

Imports were also impressive, rising 43.1% from a year earlier, the fastest gain since January 2011 and picking up from the 38.1% growth in March. It was also slightly faster than the 42.5% rise tipped by the Reuters poll, bolstered by higher commodity prices.

But Zhang Yi, chief economist at Zhonghai Shengrong Capital Management, said it remains to be seen if strong import growth, mainly driven by price inflation, could be sustained as China winds down its fiscal policy support.

"It must be noted that the fast year-on-year growth today was largely due to the negative growth a year ago. The two-year average growth was only about 10%, which is not that strong."

Source: Reuters

China trade