Due to the spread of the epidemic and the suppression of domestic demand, China’s imports fell sharply in March, and the price factor supported the strong operation of exports. At present, the impact of the epidemic on exports has not yet fully appeared. When production and logistics are blocked, the export data may weaken in April. If the epidemic spreads further in the short term, China’s supply chain advantage may be challenged. Under the environment of the decline of external demand, the export may be further under pressure during the year.
The epidemic dragged down imports and prices supported exports. In March 2022, the year-on-year growth rate of exports was 14.7%, which continued to be strong, while the year-on-year growth rate of imports was – 0.1%, which was significantly lower than expected. Due to the large monthly fluctuations in the amount of foreign trade and the recent sharp fluctuations in the price of bulk commodities, after excluding the influence of price factors, we found that the export fell slightly compared with the previous month, but the range was small. The price factor was an important factor supporting the year-on-year increase in the amount of export, while the decline of import was significantly greater after excluding the price factor. With the intensification of the epidemic, many places entered the closed control mode, the overall domestic demand was weak, and the drag on imports was more obvious.
The impact of the epidemic on exports has not yet fully emerged. Since March, the epidemic has spread across the country, Shanghai has been plagued by the epidemic, and the supply chain has also been significantly disturbed. Due to the strict sealing and control policy, the vehicle freight index is significantly weaker than the same period last year. The year-on-year growth rate of foreign trade container throughput of the eight hub ports in March was – 1.2% and 10.1% respectively. The impact of the epidemic in Shanghai has not been fully reflected. Under the condition of limited production and logistics, exports may fall further in April.
From the PMI new order data, the order index of China and foreign countries has dropped significantly, the Chinese epidemic has intensified, the overseas economy has peaked and declined since the middle of last year, the three-year compound growth rate of exports in various regions of East Asia has dropped in March, the PMI sub item in the United States shows a relatively obvious decline in demand, the new orders and import sub items have declined, the output repair is slow, and the customer inventory has increased, We need to guard against the risk of further decline in external demand. As of December last year, China’s exports still had strong competitiveness. However, with the intensification of the epidemic in China, the logistics in the Yangtze River Delta, the Pearl River Delta and other economic core areas are blocked, and China’s supply chain advantages may be challenged. If the epidemic continues to spread in a short time, the export growth rate may be further pressured after the further decline of external demand.
Looking back, the market will look for a new pricing equilibrium after the rebound. In the short term, there are certain variables in geopolitics, the trend of China’s epidemic, the implementation of stable growth policy and the upward range of US debt. It is suggested to follow up and wait-and-see and respond flexibly. The undervalued value is still relatively dominant, but the structural differentiation may enter the middle and late stage. The Treasury bond yield center may remain low in the current range, and it may take some time for the market to repair economic expectations.
Risk warning: the epidemic situation exceeded expectations
