Event: in US dollars, exports in March were 14.7% year-on-year, expected to be 13.1%, and the previous value was 6.2%; Imports were - 0.1% year-on-year, expected to be 8.2%, and the previous value was 10.4%; The trade surplus was US $47.38 billion, up from US $30.58 billion.
Core conclusion: external demand is weak, but China's export is still strong, and price is the most important support; Import growth turned negative for the first time since September 2020, further highlighting the lack of domestic demand. Continue to remind that the end of the policy has come and the end of the economy has not yet arrived. The top priority of the policy is still to make every effort to stabilize growth (including foreign trade); The subsequent exports are still resilient, focusing on the four major disturbances in the short term.
I. on the whole, exports were not bad in March, imports were weak, and insufficient domestic demand was still a big drag. In terms of exports, exports in March increased by 14.7% year-on-year, higher than the expected 13.1% and the previous value of 6.2%; The export was 26.9% month on month, basically in line with the seasonality (the average value in the same period of 20142019 was 26.8%), indicating that the export was still strong in March, indicating that the drag on export caused by China's high incidence of epidemic and limited logistics has not yet appeared. In terms of imports, imports in March fell by 0.1% year-on-year, lower than the expected 8.2% and the previous value of 10.4%, the first negative increase since September 2020; Imports were 22.3% month on month, weaker than the seasonality (the average in the same period of 20142019 was 27.5%), which further highlighted the shortage of demand in China.
II. Specifically, there are four signals behind the uneven cooling and heating of imports and exports
1) the external demand is weak, but China's export is still strong, and the price is the most important support. On the one hand, in March, the manufacturing PMI of the world and major economic systems such as the United States, the euro zone and the United Kingdom decreased by 0.6, 1.5, 1.7 and 2.8 percentage points respectively; Similarly, the three-year compound growth rate of exports of South Korea and Vietnam, which are similar to China's export structure, also decreased by 0.4 and 1.3 percentage points respectively in March, indicating the weakening of foreign demand in March, which is also corresponding to the decline of China's PMI new export orders and the foreign trade container throughput of the eight hub ports in March. On the other hand, export is the result of the joint action of volume and price. Especially since the second half of 2021, the weight of price has increased significantly. Foreign demand weakened in March, but the export is still higher than expected year-on-year, indicating that price is still an important support for export. Moreover, from the perspective of commodities with announced export amount and quantity, for example, the export amount of aluminum increased by 75.6% year-on-year, the export quantity increased by only 34.0% year-on-year, the export amount of fertilizer decreased by 6%, the export quantity decreased by 40.2%, the export amount of integrated circuits increased by 15.5% year-on-year, and the export quantity decreased by 13.4% year-on-year.
2) weak investment chain and weak export chain: two strong chains. First, travel related products such as luggage, shoes and boots increased by 32.7% and 26.6% respectively year-on-year, pointing to the relaxation of overseas epidemic prevention and control and the increase of travel demand. Second, automobile exports increased by 54.6% year-on-year, continuing the ultra-high growth rate, which is also one of the highlights of China's sustained export in the past two years. However, due to the impact of this round of epidemic, a number of auto enterprises in Shanghai have announced shutdown. We need to pay attention to whether it will disturb auto exports in April. Third, in March, the export of mechanical and electrical products increased by only 11.2% year-on-year, about 3.5 percentage points lower than the overall growth rate. In March, China's machine tool import decreased by 11.6% year-on-year, pointing to the slowdown of global production and economic recovery. Fourth, the completion chain continued to be weak. In March, furniture, lamps, household appliances and other completion related products increased by 7.1%, 9.9% and - 8.5% respectively year-on-year, which were lower than the overall export growth rate, and the corresponding overseas completion cycle was in the downward range.
3) export countries continue to differentiate, pointing to differences in economic recovery in different countries. Exports to developed countries continued to diverge in March, with exports to the European Union and the United States increasing by 21.4% and 22.4% year-on-year respectively, 6.7 and 7.7 percentage points higher than the overall growth rate respectively. In particular, exports to Europe have been higher than the overall growth rate for eight consecutive months; Exports to Japan were only 9.7% year-on-year, continuing to be weak. Among emerging countries, exports to India and Brazil were highlights, with year-on-year growth of 31.6% and 22.0% respectively in March, 16.9 and 7.3 percentage points higher than the overall growth rate respectively; Exports to ASEAN and South Korea were 10.4% and 14.4% respectively, both lower than the overall growth rate.
4) energy is an important support for imports in March. After excluding energy, the growth rate of imports in March decreased even more. In March, energy imports (crude oil, coal and lignite, refined oil and natural gas, etc.) totaled US $38.27 billion, a year-on-year increase of 36.6%. In particular, the conflict between Russia and Ukraine has led to the rise of energy prices, which has a great impact on prices. For example, the quantity and amount of crude oil imports in March decreased by 14.0% and increased by 36.0% year-on-year respectively; The import quantity and amount of coal and lignite decreased by 39.9% and increased by 6.7% respectively year-on-year. In other words, excluding energy imports, the decline in import growth in March will further expand to 5.2%, which is also corresponding to the manufacturing PMI (down 0.7 percentage points) and PMI import index (down 1.7 percentage points) in March.
III. looking back, the export probability tends to decline in 2022, but the resilience is still strong, focusing on the four major disturbances in the short term
Throughout the year, the previous judgment is maintained: in view of the global economic slowdown, weakening price support, rising base center and other factors, China's export growth rate tends to decline in 2022, but the rhythm and extent of the decline still need further observation. It is inclined to think that the export toughness is still strong, and the annual export growth is expected to reach about 5% - 8%. Short term focus on four major disturbances:
The epidemic disturbs logistics and supply chain: in the previous report, we pointed out that the epidemic may disturbs the supply of logistics and some industries, especially the logistics in Northeast China and Yangtze River Delta decreased significantly in March. Although the data in March showed that the impact of logistics decline on exports was limited, Shanghai, as China's largest foreign trade port, still needs to pay attention to whether the subsequent epidemic will disturbs export transportation and import customs clearance.
The uncertainty of the conflict between Russia and Ukraine is still strong: in the previous report, we repeatedly prompted to focus on whether the rise in energy prices caused by the conflict between Russia and Ukraine will drag down the global and European economies, and then affect China's exports. At present, the European and American sanctions against Russia, the negotiations and wars between Russia and Ukraine are continuing, and the uncertainty is still strong. In the short term, we still need to pay attention to the progress of the negotiations, European and American sanctions and oil prices.
Implementation of measures related to stabilizing foreign trade: on December 10, the central economic work conference made it clear that "multiple measures should be taken to stabilize foreign trade". 4.2 The State Council held a symposium on foreign trade situation again, further emphasizing "doing everything possible to achieve the goal and task of stabilizing foreign trade". Under the background of "the external environment is becoming more severe and complex, and development faces many risks and challenges", more stable foreign trade combinations can be expected, including stabilizing the supply chain, improving export tax rebates, financing support for foreign trade enterprises, simplifying business processes, etc.
The devaluation of the RMB and the possible improvement of the trade environment have boosted exports: Recently, the pressure on the devaluation of the RMB exchange rate has increased. On March 23, the U.S. Trade Office announced the re exemption of tariffs on 352 imported goods from China, superimposed with the official entry into force of RCEP and China's active participation in cptpp, which are also expected to boost China's exports.
Risk warning: unexpected changes in epidemic situation, external environment and policy strength
