China Exports Fall in April Unexpectedly Contract, Import Slide Worsens

More Stimulus Seen

China’s exports unexpectedly fell 6.4 percent in April from a year earlier, while imports tumbled by a deeper-than-forecast 16.2 percent, fueling expectations that Beijing will quickly roll out more stimulus to avert a sharper economic slowdown.

The dismal trade performance raises the risk that second-quarter economic growth may dip below 7 percent for the first time since the depths of the global financial crisis, adding to official fears of job losses and growing levels of bad debt.

The central bank has lowered interest rates and banks’ reserve requirement ratio (RRR) thrice in three months since November to stoke the economy, and most analysts had expected it to loosen policy again on both fronts in coming months.

Policy insiders told that China’s leaders have been caught off guard by the sharpness of the downturn, and are likely to resort to fiscal stimulus to revive growth after a flurry of monetary policy easing has proved less effective than hoped.

Imports have been weaker than exports, falling 16.2 percent in April from a year earlier, according to data released by the General Administration of Customs on Friday, highlighting tepid domestic demand as the world’s second-largest economy slows.

In April, exports to the United States, China’s top export market, rose 3.1 percent from a year earlier, while shipments to the European Union, the second largest market, dipped 10.4 percent, according to customs data.

Earlier this week, China’s trade minister said the devaluation of currencies by some countries has led to sharp gains in the yuan, hurting the competitiveness of Chinese exports.

The yuan has gained against major non-dollar currencies in recent months, leading to its rise on a trade-weight basis.

While some exporters said they have not felt the impact of a rising yuan, thanks in part to the growing popularity of currency hedging options, few doubt that sales would suffer in coming months if the yuan sustains its ascent.

China had a trade surplus of $34.13 billion for the month, widening from $3.08 billion in March.

Chinese Vice Premier Wang Yang was quoted by Xinhua state news agency as saying last month that authorities must arrest China’s export slowdown lest it further dampen economic growth.

China’s trade grew 3.4 percent in 2014, missing the government’s growth target of 7.5 percent by more than half.

The government has lowered its growth target for 2015, with combined imports and exports expected to rise around 6 percent.