China's export growth of 7.9% beats forecasts on war-risk stockpiling

China’s export growth accelerated sharply to 7.9% in April, beating expectations as global firms rushed to stockpile goods, while import growth slowed, highlighting a continued reliance on external demand to offset weakness at home.

"Chinese exporters have so far weathered the fallout from the Middle East conflict, buoyed by overseas buyers scrambling to secure supplies," economists noted in a recent Reuters poll, but warned that "the longer the war drags on... the greater the risk that external demand fades away."

The 7.9% year-on-year rise in dollar-denominated exports reported Saturday was a significant jump from the 2.5% increase in March. In contrast, imports grew 20.6% in yuan terms, a deceleration from the 23.8% pace recorded a month prior. This divergence is expected to widen China's trade surplus to $83.3 billion from March’s $51.13 billion.

The data presents a complex picture for Beijing. While strong exports helped first-quarter GDP growth reach 5%, the slowdown in import growth reinforces concerns about sluggish domestic consumption, potentially weighing on global commodity prices and affecting multinational firms dependent on Chinese consumer spending.

The surge in outbound shipments was driven by companies securing manufacturing supplies and components from China. This stockpiling comes amid fears that the ongoing conflict in the Middle East could drive up global energy and shipping costs, disrupting supply chains. Factory activity data from April supports this, showing new export orders climbed to a two-year high.

A leading indicator of Chinese industrial activity, South Korea’s exports to China, provided a clear signal of this trend, jumping 63% last month, led by strong demand for semiconductors. This indicates robust purchasing for production, rather than final consumption.

The moderation in import growth, however, points to the persistent challenge of weak consumer confidence and a struggling property sector. While China's economy is meeting its top-line growth targets, underlying metrics like retail sales growth and unemployment continue to lag industrial production, creating an unbalanced recovery.

This dynamic will be a key focus for global markets and policymakers. U.S. President Donald Trump is expected to visit China next week for talks with President Xi Jinping, where the trade imbalance and strategic economic issues will be high on the agenda.

This article is for informational purposes only and does not constitute investment advice.