Trade numbers were in the negative YoY in April. Much of the export decline can be explained by a strong currency vs. trade partners, as Beijing has refrained from weakening the CNY to boost competitiveness. The CNY was up roughly 19% vs. the EUR and 15% vs. the JPY over the last year, feeding through to the declines in exports. We should expect to see weak exports for months to come, which will be a drag on overall growth prospects this year.
Imports, one of the best gauges of short-term activity outlooks, declined significantly, -16% from last year. Much of this is a result of commodity price declines, but after accounting for price declines the underlying import number is probably somewhere around -7-8% on the year.
Commodity exporting countries continue to feel the brunt of China's import demand weakness. This will continue until Beijing's fiscal and monetary stimulus reach the broad economy, and/or the housing market turns back to the positive.
My import and commodity demand forecasts are still hinting at continued declines over the next few months.
Commodity imports on a volume basis:
Soybeans -18% YoY, iron ore -4% YoY, copper -5% YoY, crude oil up 9% YoY.
