MNI China Daily Summary: Thursday, May 16

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Imports Rebound More Than Forecast, Export Growth Back In Positive Territory

CHINA DATA
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China trade figures for April saw export growth rise 1.5% y/y, close to expectations (1.3%), but comfortably above the prior month's -7.5% pace. Imports were stronger than forecast though, up 8.4% y/y (4.7% forecast and -1.9% prior). The trade surplus was below expectations, printing at $72.35bn, largely due to the import beat.

  • The first chart below overlays y/y export growth against CNY NEER y/y changes. There is a modest divergence, where the NEER looks too strong in y/y terms relative to the export trend but it is modest by historical standards.
  • The authorities may continue to guard against the pace of yuan depreciation pressures rather than accept a sharp fall in the hope it boosts exports. Such a move may only raise competitiveness concerns with some of China's key trading partners.
  • The export trend is expected to remain on a recovery path this year per the latest from our policy team (see this link).

Fig 1: CNY NEER Versus Export Growth Y/Y

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China trade figures for April saw export growth rise 1.5% y/y, close to expectations (1.3%), but comfortably above the prior month's -7.5% pace. Imports were stronger than forecast though, up 8.4% y/y (4.7% forecast and -1.9% prior). The trade surplus was below expectations, printing at $72.35bn, largely due to the import beat.

  • The first chart below overlays y/y export growth against CNY NEER y/y changes. There is a modest divergence, where the NEER looks too strong in y/y terms relative to the export trend but it is modest by historical standards.
  • The authorities may continue to guard against the pace of yuan depreciation pressures rather than accept a sharp fall in the hope it boosts exports. Such a move may only raise competitiveness concerns with some of China's key trading partners.
  • The export trend is expected to remain on a recovery path this year per the latest from our policy team (see this link).

Fig 1: CNY NEER Versus Export Growth Y/Y

Keep reading...Show less