冯氏集团利丰研究中心-中国贸易季刊5月21日第62期（英文）-2021.5-20页_697kb

China Trade Quarterly Summary

Core Content

This document provides an overview of China's domestic and foreign trade developments in the first quarter of 2021 (1Q21), along with policy updates and outlooks for both sectors. It highlights the economic recovery, growth in key indicators, and the evolving trade dynamics.

Main Points

Domestic Trade

• Economic Growth: China's real GDP growth reached a record 18.3% yoy in 1Q21, driven by a low comparison base from the previous year. The forecast for 2Q21 is 8.0% yoy.
• Retail Sales: Total retail sales of consumer goods rose by 33.9% yoy in 1Q21, reaching 10.5 trillion yuan. The growth is expected to slow to 18.0% yoy in 2Q21.
• Catering Services: Catering sales saw a sharp rebound of 75.8% yoy, reversing a 44.3% yoy decline in 1Q20, but still 2% below the level in 1Q19.
• Industrial Production: Industrial output growth was 24.5% yoy in 1Q21, with a forecast of 9.0% yoy for 2Q21. Consumer discretionary categories like 'gold, silver and jewellery' and 'automobiles' showed the strongest growth.
• Fixed Asset Investment (FAI): FAI (excluding rural households) grew by 25.6% yoy in 1Q21, reaching 9.6 trillion yuan. The manufacturing sector is expected to lead the growth in FAI.
• Money Supply and Loans: The growth of M2 and total outstanding RMB loans slowed, indicating a moderation in credit growth. The PBoC emphasized maintaining a 'normal' monetary policy.
• PMI Trends: The manufacturing PMI was 51.1 in April, indicating continued expansion but at a slower pace. The NMI (Non-manufacturing Purchasing Managers' Index) showed continued recovery, with a forecast range of 53.0 to 56.0 for the next few months.
• Policy Updates:
  • The Chinese government set macroeconomic targets for 2021, including GDP growth over 6%, over 11 million new urban jobs, and a surveyed urban unemployment rate around 5.5%.
  • A plan to encourage new modes of consumption was announced, focusing on digital transformation, contactless shopping, and fiscal support for emerging sectors.

Foreign Trade

• Export Growth: Exports surged by 49.0% yoy in 1Q21, reaching $710 billion, with a forecast of over 20.0% yoy growth in 2Q21.
• Import Growth: Imports increased by 28.0% yoy in 1Q21, reaching $593.6 billion.
• Key Export Categories: Mechanical and electrical products, which account for 60% of China's exports, saw strong growth due to increased demand for work-from-home and medical equipment.
• Trading Partners: ASEAN remained China's largest trading partner, while the US retained its position as the largest export market. The EU and Japan also showed significant growth in trade.
• FDI Growth: FDI surged by 39.9% yoy to 302.5 billion yuan in 1Q21, reflecting confidence in China's long-term economic prospects.
• Exchange Rate Trends: The Chinese yuan appreciated against the US dollar and the Euro in April, despite ongoing China-US tensions. The real effective exchange rate of the yuan increased by 2.1% in 1Q21.

Key Information

• Economic Recovery: The recovery was supported by strong export performance, rising industrial prices, and a shift towards more normal monetary policy.
• Credit Growth: Credit growth has slowed, with the PBoC maintaining a balanced approach between supporting growth and managing risks.
• Trade Policy: New initiatives to promote consumption and stabilize foreign investment were introduced, aligning with the 'dual circulation' strategy.
• Exchange Rate: The yuan showed mixed movements against major currencies, with appreciation against the US dollar and depreciation against the Euro, but remained supported by strong fundamentals.

Outlook

• Domestic Trade: Continued recovery is expected in both manufacturing and non-manufacturing sectors, with moderate credit growth and stable expansion.
• Foreign Trade: Export growth is anticipated to remain strong, with the manufacturing sector leading the way. FDI is expected to continue flowing into China due to its economic resilience and long-term prospects.