China’s domestic market remains shaky and a full export recovery is far from certain, a leading economist says.
IHS Global Insight’s Alistair Thornton said trading figures for April revealed domestic weakness had been compounded by bearish demand from key markets overseas, especially Europe. “Whichever way you slice them, export growth is weak, and import growth is weaker,” he said.
After China’s exports increased 8.9 percent in March, growth slowed in April to 4.9 percent, far lower than the 20.6 percent growth achieved last year, and a slower rate than most analysts had predicted, not least because China’s official Purchasing Managers’ Index for April suggested a trading recovery was under way.
China also saw import growth decline 0.3 percent year-over-year in April, down from the 5.3 percent growth recorded in March and the 25 percent year-over-year average of 2011.
While China’s exports to the U.S. increased 10 percent last month, it was not enough to compensate for 2.4 decline in exports to the EU, the third consecutive month of sub-zero growth. “From the external side, it is fairly clear where this weakness is coming from,” Thornton said. “Over the first four months, the European Union saw bilateral trade grow only by 0.3 percent year-over-year, sharply down from the 2.6 percent year-over-year number for the first three months.”
April’s import growth figures were the worst since October 2009 as imports totaled just $145 billion, down from the recent peak of $160 billion in November.
Thornton said sluggish domestic demand for imports was due to broad weakness across the “fragile” Chinese economy, although easier credit, accelerating state investment in infrastructure and better numbers from the housing and steel sectors left room for optimism.
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