Sell-Side Updates Post China Trade Figures

HSBC and J.P. Morgan updates are outlined below post yesterday's China trade figures. Both expect a further expansion in external demand, albeit not without risks.

• HSBC: The April data suggests that we may tentatively be seeing more signs of revival in global demand, though the key focus will likely still be on sustaining the momentum in domestic demand. Nonetheless, Beijing continues to engage outwards and the latest April Politburo Meeting specifically called for the expansion of trade in intermediate goods, services and digital trade as well as cross-border e-commerce exports, while also supporting private firms in expanding to overseas markets (Xinhua, 30 April, China April Politburo Meeting, 30 April). Domestically, we see policymakers maintaining a proactive approach led by fiscal policies, while accommodative monetary policy and targeted policies such as for the property sector and growth industries like technology and green development will also provide support."
• J.P. Morgan: "Going ahead, we look for relatively steady growth in China’s export activity through 2024. On the external front, our global team has highlighted resilient corporate income gains, bolstering business spending and global capex, as well as boosting labor income (hence supporting pickup in consumer spending), hinting at decent global goods demand growth outlook. The broad-based growth in Chinese exports to a range of markets in recent months, including US, Europe, EM Asia, as well as some other key EM economies (LatAm and Africa) , as highlighted above, reinforces constructive signals on global goods demand conditions, aided by Chinese exporters’ aggressive price competition amid domestic PPI deflation pressure. In addition, following solid manufacturing investment, and hence capacity expansion growth, in the past two years, and amid lingering softness in domestic demand conditions, Chinese exports will continue to push for expanding export markets. On the cautious side, aggressive price competition and China’s growing manufacturing capacity, including the strong-growth new industry sectors such as NEVs and new energy products, raise concerns of counter measures by competing trading partners, leading to potential trade tensions."