Three important things to note about China's April trade data:
- Imports and exports of manufactured goods point to a decline in the global supply-chain as global growth remains sluggish. Supply-chain trade saw steeper declines than trade for domestic purposes. Imports for trade processing dropped 21%, and exports for processing and assembly fell 13%. Imports from key manufacturing suppliers - like Malaysia, Philippines, and Korea - have fallen more than key commodity countries (see chart on the right).
- Commodity imports remained robust but weaker than the big demand surge in March. YTD, many of China’s key commodity imports, like copper and crude oil, are in the double digits. That is consistent with the recent rebound in investment and construction data that should keep commodity demand higher than in the last two years. But, the sustainability of the recent commodity demand boost is questionable in the long-term.
- Imports from Hong Kong rose over 200%, indicating that capital outflows hidden in trade invoices in order to escape capital controls has not stopped. Outflows have slowed, but efforts are still being made on the mainland to sneak money out of the country.