The blustery tailwinds that drove China’s stunning recovery in growth for much of 2016 and early 2017 appear to be dying down, with a second major economic indicator for April showing signs of a slowdown, so complicating Beijing’s task of delivering stability while squeezing excessive leverage from its financial system.
Both the official and private-sector compiled purchasing manager’s index releases at the start of May were the first to signal a softer Q2 is in the offing, seemingly catching China watchers by surprise – based on survey results available prior to the PMI reports.
And then growth in foreign trade last month came in at roughly half the pace compared with March, after import volumes of China’s key input commodities – iron ore and crude oil – fell by more than 10% from the previous month.
Exports rose a less-than-expected 8% in April compared with a year earlier, while imports also missed their mark with an 11.9% gain, the official trade data showed.
Analysts polled by Reuters had expected April shipments from the world’s largest exporter to have risen 10.4%. Exports rose 16.4% year-on-year in March. The same poll predicted an 18% gain in imports, following the 20.3% in March.
The resulting trade surplus of US$38.05 billion was about US$3 billion higher than a survey of analysts by Bloomberg and was up from March’s US$23.93 billion.
The 82.23 million tons of iron ore imports made it the smallest monthly sum since last October, and more than 13 million tons lower than the previous reading. The lower tonnage shaved a billion US dollars from China’s overall import bill for the month, helping to bump up last month’s trade surplus.
Total inventory of the red earth mineral has been hovering at or near record high levels of 132 million tons since late March, according to Steelhome, a data provider for the Chinese ferrous sector.
Crude petroleum intake also took a breather in April, with tonnages coming off to 34.39 million tons from 38.95 millions in March. The total monthly oil bill came to about US$13.1 billion or US$2.4 billion lower than the previous one.
While these commodities pullbacks do not necessarily portend to a pending crash in the Chinese economy, the pressure is weighing on Beijing’s shoulders to keep a respectable year ahead, and as expected, keep pushing its infrastructure juggernauts rolling at both home and abroad, especially in friendly countries along the the Belt and Road Initiative.