According to the data released over the weekend, both Chinese exports and imports shrank in April from a year back. Exports declined as much as 1.8% in USD, while imports declined 10.9%. These indicate March surge has largely reversed, when exports rose 11.5% and deepening 7.6% decline in imports.

First quarter improvements in statistics from China was so surprising that many called a rebound in Chinese economy. GDP growth was 6.7% in first quarter. Fixed asset investment grew 10.7% y/y in march, which not only has beaten forecast but was strongest since August last year. Property investments grew 6.2%, while property sales rose 33%. Industrial production grew 6.8% y/y in March, sharp jump from 5.4% in January-February.

While China’s official PMI rose above 50 in manufacturing in April, indicating first signs of growth in months, private PMI compiled by Caixin and Markit shows manufacturing sector downturn is continuing. Moreover, according to the private reading services sector shrank too.

As China cracks down on data release, gap has grown between official and private numbers, which means we can rely lesser than ever on official data.

Still China will have to continue to post data, such as FX reserve, trade balance on which we can rely and which has been showing weakness.

In April China’s FX reserve rose by $7.1 billion to $3.2 trillion but large part of that came from revision of values in the reserve. China suffered $14 billion outflows in April at least.

As the government is increasing stimulus, a rebound is very much likely but if that doesn’t happen, then it’s scarier. Capital can’t fuel growth anymore in world’s second largest economy.

China's stock market was down around -2.8% today, while Yuan is trading at 6.52 per Dollar.