China’s April trade data
On May 8, China released its trade data for April. The country’s imports in US dollar terms rose 4%, while its exports fell 2.7% YoY (year-over-year). The data offered mixed signals to markets. Imports beat the expectations, while exports lagged analysts’ estimates. According to a Reuters poll, analysts expected China’s exports to rise 2.3% and its imports to fall 3.6%.
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In March, China reported a 14.2% rise in exports, while its imports fell 7.6%. Before April, China’s imports contracted YoY for four consecutive months. Since China’s imports growth beat the estimates and the exports fell, its trade surplus narrowed to $13.84 billion in April. The country’s trade surplus, often a sore point with its trading partners including the US, was $32.65 billion in March. Analysts expected China’s trade surplus to rise to $35 billion in April.
China’s trade data add another twist in a week full of surprises. Over the weekend, President Trump surprised markets by announcing a tariff hike on $200 billion worth of goods from China. He threatened to impose tariffs on the remaining goods from China. The S&P 500 (SPY) has closed in the red for two consecutive days since President Trump raised the rhetoric on trade.
President Trump’s trade rhetoric could jeopardize China’s fragile recovery. Earlier this year, Apple (AAPL) and NVIDIA (NVDA) cited China’s slowdown as a concern. However, after Apple’s second-quarter earnings release, CEO Tim Cook expressed optimism about China. While President Trump has taken a tough stand on China, companies like Alphabet (GOOG) and Amazon (AMZN) opposed the tariffs last year.