Questions have been raised after China posted surprisingly strong import and export data in April, one month after reporting a trade deficit.
Exports were up by 14.7 per cent on a year earlier, and an increase on the 10 per cent reported in March. Imports increased by 16.8 per cent year-on-year, up from 14.1 per cent the month before.
Markets have responded positively to the data with the FTSE 100 up 0.3 per cent to 6,577.9 this morning while the Shanghai Composite index rose nearly 0.5 per cent to 2,246.3 for the day.
Questions have been asked about the data, which is anomalous when compared to the relatively weak exports of South Korea and Taiwan, which usually show similar trends. Some have suggested that exporters have been sneaking cash into China by over-invoicing.
But Mark Williams and Qinwei Wang at Capital Economics argued that the reason behind the surprisingly strong data is more straightforward:
“We do not believe that the rebound was driven by strengthening overseas demand. Nor do we think it was due to a surge in over-invoicing by exporters as a means of evading controls on capital inflows, which is the explanation some prefer,” they said.
“The chief reason is more mundane: there were two more working days in April this year than in 2012, due to the shift in the timing of Qingming Festival Holiday. This alone is enough to explain April’s strength. Consistent with this view, April’s rebound was far less impressive in levels terms”.
