Event:
On March 7, the General Administration of Customs announced that China's import and export data denominated in US dollars from January to February were 15.5% (the previous value was 19.5%) and 16.3% (20.9%) respectively. Judging from the trend after the quarter on quarter adjustment, the export growth rate further slowed down; Exports peaked in the fourth quarter of last year and the trend of moderate decline was confirmed. We expect that the quarter on quarter growth rate of China's exports will continue to decline in the future. The export growth rate from January to February was not better than expected, which may also indicate that the optimistic expectations for the economy caused by the improvement of PMI in February did not have enough support. We maintain the judgment that the negative output gap of China's economy will expand in the first quarter.
The month on month growth rate of exports slowed down as scheduled
The year-on-year downward trend of exports has base factors. However, from the quarter on quarter growth after seasonal adjustment, China's exports also fell significantly from January to February compared with the level in the fourth quarter of last year. Our judgment that China's exports peaked in the fourth quarter of last year has been further verified. Evidence such as differences between countries, categories and micro feedback reflects that the substitution effect of the resumption of work and production in Southeast Asia on Chinese products is gradually emerging - we think this is also an important reason for the slowdown of China's export growth.
The degree of short-term export decline is still relatively mild
On the one hand, the micro feedback shows that the orders of large enterprises are still relatively abundant. On the other hand, the export of some squeezed low value products after the decline of shipping prices is still expected to form a certain support for exports. Therefore, in the short term, the degree of export decline still seems to be moderate.
The month on month decline in imports shows that China's demand may fall in the short term
The seasonally adjusted import growth rate also ended the rebound in the fourth quarter of last year and weakened again. As the import growth rate is closely related to China's demand and output, the month on month decline in imports may further herald the end of the economic rebound in the fourth quarter of last year due to improved supply. In fact, considering the recent continuous rise of commodity prices, the performance of actual import growth may be worse - in terms of import volume, the import of some bulk commodities and raw materials such as iron ore and crude oil increased negatively year-on-year from January to February.
We should not be optimistic about short-term economic growth
After the release of China's PMI data in February, the market generally had a more optimistic estimate of China's economy because it did not take into account the distortion of the quarterly survey data (PMI comments in February). As high-frequency data and other evidence show that Chinese demand is relatively weak, some investors believe that the source of short-term improvement may be exports - in fact, the improvement of export PMI is also the most obvious. The export data that did not exceed expectations from January to February shows that this optimistic expectation may fail. We maintained the judgment that the negative output gap of China's economy may expand in the first quarter and the GDP 4.4 in the first quarter 5% forecast.
Risk warning: the export is inconsistent with the expectation; Global epidemic deterioration; Sino US relations deteriorated more than expected
