At present, the growth of foreign demand has a tenacity to support China's export fundamentals. In March, due to the supply reserves at the port, the export was not significantly affected. However, since March, the strict control brought by the wide spread of the epidemic in China has led to a significant decline in China's inland transportation volume, which has affected the supply chain and the production of Chinese enterprises on the one hand, and the supplement of port export sources on the other hand. Therefore, there will be a double drag on exports and imports. Recently, the State Council, the national development and Reform Commission, the Ministry of communications and other departments have stressed the need to break through the traffic jam through various meetings to help the logistics industry recover and further drive economic growth. It is expected that the impact will be significantly weakened after April.
Matters: in March 2022, China's export volume (US dollar caliber) increased by 14.7% year-on-year (wind unanimously expected 13.1%), and it was 16.3% from January to February; The import amount (US dollar caliber) increased by - 0.1% (wind unanimously expected 8.2%), which was 15.5% from January to February; The trade balance was 47.38 billion US dollars. We comment on this as follows.
The resilience of overseas demand supports China's exports, but the impact of the March epidemic on inland transportation will drag down the export growth in April.
The export growth rate in March 2022 was 14.7%, higher than the market expectation. The month on month ratio in March was 26.9%, slightly higher than the average month on month ratio of 25.9% in the past 10 years. The overall export performance in March was good. China's exports to the United States, the European Union, ASEAN and Japan grew by 22.4%, 21.4%, 10.4% and 9.7% respectively. China's exports to the United States and Europe were significantly higher than those in the Asian region. At present, the logic of export remains unchanged. In the short term, although there is a marginal slowdown trend in overseas demand (mainly the United States and Europe), the prosperity is still high compared with the historical performance. It is expected that the export growth rate will also show a marginal slowdown, but still maintain a high growth rate. In our report "economic and financial data forecast for March 2022: the impact of the epidemic may put pressure on economic growth in the first quarter", which was issued on April 5, we stressed that according to the port's foreign trade throughput, the impact of the epidemic on exports in March is relatively limited because the port has supply reserves. From the perspective of industry, taking Shanghai as an example, in 2021, Shanghai's main export commodities include automobiles, ships, integrated circuits, jewelry, etc., and Shanghai's total export accounted for 7% of the country's total export. Among the year-on-year export growth of the above industries in March, the decline of automobile was the most significant, and the growth of other integrated circuits, ships and medical devices weakened slightly. Overall, it is inferred that the drag of the epidemic on exports has a certain performance in the data in March, but it is not obvious. It is expected that the change in April will be more significant. Since March, the strict control brought by the wide spread of the epidemic in China has led to a significant decline in China's inland transportation volume, which has affected the supply chain and the production of Chinese enterprises on the one hand, and the supplement of port export sources on the other hand. In March, the container throughput of the eight hub ports increased by 1.8% year-on-year (the former value was 3.8%), of which foreign trade increased by 3.9% (the former value was 2.7%), and domestic trade increased by - 3.9% (the former value was 3%) year-on-year. It is expected that exports in April may fall to a certain extent due to the impact of the epidemic in the short term.
The import link ratio is slightly weaker than the seasonality, and weak Chinese demand will continue to drag down import growth. In March 2022, the import growth rate was - 0.1%, with a month on month growth rate of 22.3%, slightly lower than the average of 22.3% in the past 10 years. From the perspective of importing countries, China's import growth to the United States, Europe, ASEAN and Japan was - 12%, - 11.6%, 2.7% and - 9.8% respectively. The import growth to ASEAN was better than that to other regions. In terms of commodities, natural gas, crude oil and other raw materials maintained the growth of imports, and most of the finished products fell to varying degrees. Some of the positive growth in imports related to raw materials comes from the contribution of prices. On the whole, it is mainly the decline in imports caused by weak Chinese demand. In April, affected by the epidemic, China's production and export will be under pressure, and it is difficult for imports to perform well.
The spread of the epidemic and the upgrading of control policies have put great pressure on the field of economic flow. The interruption of the supply chain has a wide impact on the economy, which will disturb exports in April. Since March, the number of provinces affected by the epidemic has gradually increased. Due to the faster spread of Omicron, the epidemic control policy has become stricter. However, it also leads to a significant impact on the transportation and logistics between regions, which has a wider impact on the economy. Changchun, Shanghai and surrounding cities with serious epidemic are key areas for automobile and parts production. The impact on industrial production has dragged down relevant imports and exports. We expect that due to the impact of the replenishment of port supply, the export may be disturbed by this drag in April. However, the State Council, the national development and Reform Commission and the Ministry of communications have stressed through various meetings the need to break through the traffic jam, help the logistics industry recover and further drive economic growth. The impact is expected to weaken significantly after April.
