Chinese exports

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Doesn’t Beijing know there is a recovery under way? Chinese exports fell 23 per cent in April compared with the same month last year. That is worse than March’s 17 per cent drop and falls short of economists’ forecasts too. Still, there is some solace for determined optimists. Prolonged Chinese new year holidays may have delayed production and shipments, boosting the March figure.

Indeed, if you take the data at face value, on a seasonally adjusted month-on-month basis, April exports rose 7 per cent. (Private sector economists demur and calculate they fell by 1-3 per cent). Although official data are a fraction of the 33 per cent growth in March against February, they are still a positive sign.

Furthermore, national investment data, also released on Tuesday, buoyed bull spirits. With the government shovelling money into the economy – specifically infrastructure projects – investment leapt by 30.5 per cent in the first four months of the year compared with 2008.

But there remain considerable risks. Global consumption has not bounced back. Until it does, China will be one engine down. Exports to the European Union, China’s biggest market, fell 27.5 per cent year on year in April. True, there have been some perkier personal consumption data out of the US. But, from China’s point of view, lower prices dull the gloss; US import prices fell 0.6 per cent in the month to March, the fourth consecutive drop, according to US figures.

Even if China’s model is changing to one less dependent on exports, such a huge structural shift will inevitably bring havoc in its wake. Not every factory worker can be newly employed in construction, nor can every industrialist find new markets at home.

Unemployment and sliding profits do not make for rising consumption in China any more than they do anywhere else. The message from the world’s third biggest economy may be at odds with the fast-spreading conspiracy of optimism but it is one that gels with mostly choppy data elsewhere. V-shaped recoveries, for China at least, are out.

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