China reports stronger April trade growth

CHINA has reported stronger April trade but analysts say its export data is inflated and its shaky recovery may be weaker than it looks.

Exports rose 14.7 per cent over a year earlier, up from March's 10 per cent growth, customs data showed on Wednesday.

Imports gained 16.8 per cent, up from the previous month's 14.1 per cent.

That suggested the world's second-largest economy might be improving after an unexpected decline in growth to 7.7 per cent in the first three months of the year from the previous quarter's 7.9 per cent.

Analysts say, however, Chinese export data are unreliable, possibly due to companies submitting inflated prices for their goods to evade capital controls and bring money into the country.

"We believe the strong trade growth is not indicative of a growth recovery," said Zhiwei Zhang of Nomura in a report.

Chinese leaders are trying to nurture self-sustaining growth driven by domestic consumption instead of trade and investment, but consumer spending is growing slowly.

That has forced Beijing to rely on state-led investment and bank lending to shore up the recovery, which analysts say could be vulnerable if exports or investment decline.

The weaker-than-expected first quarter numbers prompted the World Bank and private sector analysts to trim forecasts for full-year growth, though to still robust levels of about 8 per cent.

Louis Kuijs and Tiffany Qiu of RBS said after factoring out irregularities, they estimated China's exports rose only by about 5.7 per cent in April, about 9 percentage points lower than the reported level.

In a positive sign for the economy, Kuijs and Qiu said they saw no obvious irregularities in import data and no reason to inflate the values of goods.

"Reasonable import growth suggests domestic demand has held up better so far," they said in a report.

Surveys by HSBC Corp. and a Chinese industry group showed China's manufacturing growth weakened in April. HSBC said new export orders fell for the first time this year.

China's export data have been under scrutiny since analysts pointed out last year they failed to match up with its trading partners' lower figures for purchases of Chinese goods.

Wei Yao of Societe Generale cited the example of Taiwan, which reported a 2.7 percent decline in April imports from China while Beijing said exports to the island rose 49.2 percent - a gap of more than 50 percentage points.

"We continue to notice glaring discrepancies between China and its trade partners' data, and so again suggest caution in interpreting the report," Yao said in a commentary.

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