In March 2022, China's exports (in US dollars, the same below) increased by 14.7% year-on-year (the market is expected to be 12.9%), while the exports of Vietnam and South Korea were strong in the same period, both surpassing China; While China's imports were significantly lower than market expectations, and the year-on-year growth rate turned negative, down 0.1% (expected 8.6%). We believe that the impact of the Shanghai epidemic has been reflected in the import data in March, but the impact on exports is more backward, or began to be reflected in April.
Why are imports so weak? After the blockade of Shanghai, the shortage of truck drivers hindered the customs clearance of imported goods. By product, the biggest drag on import data in March came from edible vegetable oil, iron ore and meat, down 39.0%, 35.9% and 27.7% respectively year-on-year. Under the compulsory virus detection and the traffic blockade between Pudong and Puxi, it was difficult for truck drivers to pick up their suitcases at the wharf immediately. At the end of March, the waiting for loading and unloading ships in Shanghai Port soared, and the signs of port congestion appeared. According to the announcements of MSC, one and other shipping companies, some refrigerated containers and dangerous goods containers face the risk of transshipment.
Where is the expected driving force of export supermarket? In terms of subregions, the main driving force comes from the United States. In March, the year-on-year growth rate of China's exports to the United States was as high as 22.4% (13.7% from January to February), and the EU and ASEAN fell back to 21.4% and 10.4% respectively. In terms of products, the top three pulling forces are aluminum (year-on-year + 75.6%), automobile (year-on-year + 54.6%) and traditional Chinese medicine (year-on-year + 48.4%). Under the base effect, household appliances decreased by 8.5% year-on-year. In terms of product structure, the proportion of textile products, automobiles and aluminum materials in March 2022 increased significantly compared with March 2021, and the proportion of household appliances and audio equipment decreased.
In 2021, Shanghai assumed nearly 20% of China's exports, and the epidemic situation in Shanghai evolved into the core variable for judging the export inflection point within the year. We analyze the impact of the epidemic on China's exports from three risk dimensions:
What is the risk of port congestion? Signs have emerged, and there is a risk of rising freight rates in the future. Although the impact of port congestion on freight rates in early April has not been reflected, as mentioned above, the shortage of truck drivers has caused the accumulation of containers in Shanghai port and the increase of coastal ship queues, which may lead to more delays and push up freight rates in the future. The shipping companies shown in Table 1 said in April that the current operation restrictions are mainly caused by the limited transport capacity of trucks and the closure of factories, and the transshipment unloading port will also increase the delay. Referring to the "May 21" epidemic situation in Guangdong, restrictions such as the closure of Shenzhen Yan Tian Port Holdings Co.Ltd(000088) port once caused the number of ship delays to rise to 18 days in June. In view of the more serious and lasting disturbance to the supply chain caused by the Shanghai epidemic, the number of days of delay may be longer in the future.
What is the disturbance of the epidemic to the regional supply chain? The shortage of truck drivers and the closure of factories have dragged down production in Jiangsu and Zhejiang, a manufacturing hub. Truck drivers are an important part of the supply chain. They transport raw materials from coastal ports to inland factories. The shortage of truck drivers and the closure of warehouses in Shanghai are likely to affect the two important manufacturing centers of Zhejiang and Jiangsu, thus delaying the delivery of export products.
Is there a risk of loss of export share? In March 2022, Vietnam's export growth has surpassed that of China. If the supply chain disturbance is too large, Vietnam, India and other competitors may win orders from Chinese exporters. Our previous report pointed out that the market share of some commodities has declined in 2021, including textile products with the third largest export share. As the industrial cluster base with the largest textile production capacity in China, Zhejiang is greatly disturbed by the Shanghai epidemic, and some orders face the risk of being transferred to Southeast Asian competitors.
However, there are also support points for exports in 2022, and overseas demand for capital goods is expected to partially offset the negative impact of the epidemic. Our previous report pointed out that in the export of non epidemic prevention materials in 2021, the growth rate of capital goods export has remained stable. Although the commodity consumption of residents in developed countries represented by the United States has peaked, the enterprise capital expenditure has not returned to the trend before the epidemic. Under the replenishment of inventory and a new round of capital expenditure cycle, the overseas demand for capital goods is expected to drive China's export.
Overall, under the influence of the epidemic in Shanghai, the import and export were under pressure in April 2022. In addition, under the background that it is difficult to make a breakthrough in the Russian Ukrainian conflict in the short term and commodity prices remain high, in view of China's large dependence on bulk imports, corporate profits may be further compressed.
Risk tip: the epidemic spread exceeded expectations, and the policy hedging economic downturn was less than expected
