China and Australia Report Surge in Exports
China has recorded a surprise jump in exports by 3.5% in the month of April. However, imports decreased by 14.2% which painted a mixed picture of China’s recovery. This gain in exports reversed the 6.6% reduction in March and was marginally better than the combined negative 17.2% collapse in January and February. Economists claim that the growth rates experienced in April could not last and are expected to plateau out as economies across the globe continue to shrink.
Chinese businesses ramped up their production with available materials in a bid to try and level or reverse their financial losses inflicted as a consequence of strict lockdown measures. Medical equipment, textiles, traditional Chinese medicine saw increased sales among key trade partners including Japan, Australia, Taiwan, South Korea, ASEAN and the US. Between January and April, China’s exports fell by 9% which saw the sharpest fall since 2008 during the Global Financial Crisis. Meanwhile, imports contracted slightly less than exports at 5.9%.
In recent economic news, President Donald Trump is angered by the virus that originated in China and prospects of a renewed trade war are becoming increasingly likely. Trade between these two countries has reduced marginally as the United States has yet to reopen the economy completely.
Meanwhile in Australia, the country reported a trade surplus for the 27th successive month, which was at record levels. China and the U.S. were the main trading partners which experienced unprecedented highs. The weaker AUD to USD assisted during the pandemic for commodity shipments, while China expressed a higher demand for coal, iron ore and natural gas. Iron ore exports increased particularly with BHP Limited and Fortescue Metals benefiting from this.
Specifically, goods and services exports in March rose by 15.1% with goods being the major contributor with an increase of 21.6%. On the other hand, services exports retracted by 9.4% as global lockdowns reduced demand for Australian services. Economists at the Commonwealth Bank Group have estimated that net exports will account for 0.3% if GDP growth recorded in the March quarter. This is a beneficial contribution to the Australian economy although it may not be enough to prevent the country leading into a recession.
From a broader perspective, Australia and China are now faring better than many other countries across the globe as they record fewer infected cases than others. Both countries are now eager to reopen the economy and lift restrictive lockdown measures which paints a positive outlook for trade between the two countries, although it is still fraught with risks and uncertainty.
By Caroline Wong
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