Key investment points
In the case of a lower base in the same period last year, China's export growth fell slightly in March. By dismantling the factors of quantity and price, we found that the contribution of price still dominated the growth of export amount of China's main commodities in March, while the contribution of quantity growth turned negative. In March, China's import growth turned negative for the first time since August 2020, and the reduction in quantity constituted a major drag on imports. Looking forward to the future, China's epidemic is still running at a high level for a short time. The constraints on China's production and logistics activities still put pressure on exports. Coupled with the high base in the same period last year, it is difficult for China's export share to grow again this year. The conflict between Russia and Ukraine has led to high commodity prices, coupled with weak domestic demand, import growth may also fall into a downturn, and foreign trade operation will still face certain pressure in the future.
Export growth fell slightly. In March 2022, China's exports denominated in US dollars recorded a year-on-year growth rate of 14.7%, down from the growth rate from January to February. Although the export growth rate is still stable, on the one hand, it is affected by the lower base in the same period last year; On the other hand, the trade sanctions brought about by the conflict between Russia and Ukraine may lead to the transfer of some trade to China. At the same time, the overall improvement of the overseas epidemic has led to the recovery of foreign demand and formed a certain degree of support for China's exports.
Price is still dominant. Recently, the contribution of price factor in export growth has remained high, and the growth rate of export price index continued to rise to 10.6% in the first two months. By disassembling the export growth rate of more than ten kinds of commodities according to the factors of quantity and price, we found that in the export amount growth of China's main commodities in March, the contribution of price to export growth was dominant, while the contribution of quantity growth turned negative. In terms of categories, the price contribution of mechanical and electrical products is still dominant, and the growth of quantity is a drag on exports; Among labor-intensive products, the contribution of quantity growth exceeds the price for the first time.
Exports to the United States rebounded. From the perspective of major countries and regions, exports to the United States (22.4%) and Japan (9.7%) rebounded due to the low base effect in the same period last year. Exports to the EU (21.4%) fell slightly, but exports to ASEAN (10.4%) fell slightly. In addition to Japan, the high level of manufacturing PMI in the euro zone, the United States and Britain fell in March, but it is still above the boom and bust line, which still drives the export demand to a certain extent.
Labor intensive exports rose. Compared with the growth rate from January to February, due to the low base effect in the same period last year, the growth rate of labor-intensive products rebounded, recording 17.1%. However, the growth rate of electromechanical and high-tech products continued to fall, recording 11.2% and 9.6% respectively. Among mechanical and electrical products, integrated circuits (15.5%) fell sharply, and the decline in home appliance exports expanded (- 8.5%). The growth rate of cars and car chassis (54.6%) decreased due to the high base effect, automatic data processing equipment (9.8%) remained stable, and mobile phones (14.1%) rebounded due to the low base effect. Among labor-intensive products, the growth rate of luggage (32.6%), clothing (10.5%) and shoes and boots (26.6%) increased.
Import growth changed from positive to negative. In March 2022, China's imports increased by - 0.1% year-on-year, which was the first negative since August 2020, significantly lower than 15.5% from January to February. Imports fell sharply, mainly due to the high base effect and the impact of China's epidemic, which led to a further slowdown in domestic demand. China's PMI import index has been lower than the boom and bust line for 10 consecutive months. By disassembling the import growth rate of more than a dozen commodities according to the factors of quantity and price, we found that in the growth rate of import amount of China's main commodities in March, the contribution of price to import growth was dominant, and the contribution of quantity was negative, which significantly dragged down imports. In terms of amount, imported soybeans (1.4%), copper (6%) and iron ore (- 34%) fell significantly due to the high base effect. In terms of quantity, iron ore (- 14.5%), copper (- 8.8%) and crude oil (- 14%) declined due to the increase of base in the same period last year.
The surplus decreased slightly. In March, China's trade surplus was US $47.38 billion, which was lower than the average value from January to February, but higher than that of the same period last year. Looking forward to the future, China's epidemic is still running at a high level for a short time. The constraints on China's production and logistics activities still put pressure on exports. Coupled with the high base in the same period last year, it is difficult for China's export share to grow again this year. The conflict between Russia and Ukraine has led to high commodity prices, coupled with weak domestic demand, import growth may also fall into a downturn, and foreign trade operation will still face certain pressure in the future.
Risk tip: policy changes, economic recovery is less than expected.
