China: Rise in exports in March exaggerated due to distortions - Danske
According to analysts from Danske Bank, trade numbers from March show positive numbers that would contribute to the Chinese recovery but are not as strong as it looks.
“Exports rose stronger than expected in March by 18.7% y/y (consensus 14.9% y/y) – a very strong rebound from February where the exports declined 20.6% y/y.”
“However, as we pointed out last month the decline in February was exaggerated due to distortions around the Chinese New Year. And similarly the sharp rise in annual growth in March is exaggerated as it partly reflects a massive drop in March last year lifting the annual growth rate in 2016.”
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“Overall, though, the signs from the export sector lately have been on the more positive side with decent rebounds in the export order indices in both PMI statistics from Caixin and NBS. Hence, it does seem like the worst is behind us for Chinese exporters. They will also get some relief from a decline in the trade weighted CNY this year after several years of strong appreciation.”
“With a moderate recovery in both the export sector as well as the construction sector, the two very weak spots in the Chinese economy over the past 2-3 years are starting to recover. This should lead a broader based recovery in the construction and industrial sector, which has indeed been in a very hard landing over the past years”.
