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China’s April exports, imports fall below expectations

By Song Shengxia (Global Times)

08:07, May 11, 2012

China's exports and imports both suffered a sharp drop in growth last month, according to official data released yesterday, raising concerns about the resilience of the Chinese economy and adding pressure for the government to loosen policy and boost growth.

Exports rose 4.9 percent in April from a year earlier, well below market expectations of 8.5 percent, and down from growth of 8.9 percent in March.

Imports rose 0.3 percent, below market expectations of 10.9 percent and March's 5.3 percent increase.

The trade surplus also widened to $18.4 billion, up from 5.4 billion in March.

"The weak export data showed the effective exchange rate of the yuan may now be too high and may be seriously restraining the country's exports," Lu Zhengwei, chief economist with Shanghai-based Industrial Bank, told the Global Times.

"We need either to adjust the exchange rate in proper response to the market, or issue fiscal policies to stimulate growth, which may ease the external and internal pressure in the short term," Lu said.

Signs of weak exports emerged last week when data from the Canton Fair showed export deals signed at the fair dropped by 2.3 percent year-on-year, the first decline for the semiannual event's spring session since 2009.

"The government is expected to boost exports by adjusting the export tax rebate rate, stabilizing the exchange rate and providing more financial support to export-oriented companies," Li Huiyong, chief analyst at Shanghai-based Shenyin Wanguo Research & Consulting, told the Global Times.

"The dramatic drop of imports underlined the weakness of demand and slower-than-expected economic growth. We need also to speed up construction of water conservancy, railway and environment protection projects and low-income housing, as well as boosting investment in infrastructure to spur growth," Li said.

Lu Ting, an economist with Bank of America-Merrill Lynch, also attributed the weak trade growth in April to an unfavorable base effect. "Trade growth in March/April 2011 was unusually strong, partly due to the Japanese earthquake in March 2011," Lu noted.

"Rising oil prices earlier this year lowered new demand and started to show in import data due to the lag between orders and customs clearance," he said.

Trade growth is also expected to rebound as the base effect wears off and growth momentum picks up, Lu noted.

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