Mainland's Export Slump Eases, But Headwinds Remain

The mainland’s exports and imports slowed their declines in March after plunging in the previous two months, but a sure-footed recovery in trade was months away as the coronavirus outbreak shuts down many economies and sharply lowers global demand.

Financial markets breathed a sigh of relief after customs data on Tuesday showed overseas shipments fell 6.6% in March year-on-year, improving from a 17.2% slide in January-February, as exporters rushed to clear a backlog of orders after forced government production shutdowns.

Analysts had forecast shipments to drop 14% from a year earlier.

Yet, while the trade figures were not bad as feared, analysts say the export and overall growth outlook for the world's second-biggest economy remains grim as the pandemic has brought business activity across the globe to a standstill.

"The above-expectation March trade figures do not mean that the future is carefree," said Zhang Yi, Beijing-based chief economist at Zhonghai Shengrong Capital Management.

"A decline in exports throughout the second quarter has been the market consensus now and a drop of 20% or more is a high-probability event. For policymakers, more policies should be rolled out to address the possible societal issues stemming from mass-scale unemployment,” Zhang said.

The data showed Imports slid 0.9% from a year earlier, also above market expectations of a 9.5% drop, which the customs attributed to improving domestic demand. They had fallen 4% in the first two months of the year.

Most analysts expect the mainland’s first quarter gross domestic product data, set for release on Friday, will show a contraction – the first quarterly slump since at least 1992.

Customs spokesman Li Kuiwen told a news conference that the mainland’s trade showed some signs of recovery in March as domestic demand returns to normal, but he emphasised that difficulties facing foreign trade cannot be underestimated. (Reuters)