China published its April trade data that came in below expectations and surprised on the downside on the imports data. China’s imports dropped 10.9% y/y in USD terms, in spite of stabilization in commodity prices. In volume terms, imports of major commodities fell sharply, as compared to value terms. This highlights the weak nature of the rebound in the domestic demand at the present stage. In the mean time, exports dropped 1.8% in USD terms; however, it grew 4.1% in RMB terms, implying certain stabilization.

Nevertheless, China’s exports are still shrinking on a year-to-date basis. Given that the recent global and regional PMIs indicate soft momentum of growth, the exports outlook for China continues to be challenging in the following months, according to HSBC.

Breakdown by major commodities implies that imports of crude oil, coal and iron ore fell in terms of quantity rather than in terms of value. Some of the weakness in April might be just a ‘payback’ given the sharp recovery registered in March, said HSBC. There are certain reports that suggest volumes of property sales have decelerated after the macro-prudential tightening was introduced in late March. But there should be sufficient optimistic momentum on investment front to underpin activities in April, noted HSBC. However, continued easing of fiscal policy to underpin infrastructure investment is vital to maintain the recovery of growth in the following months, added HSBC.