The Wall Street Journal Reports,"'We’ve had more proof that financial markets are in thrall to central banks rather than caring about the health of the economy. Data out of Asia and Europe were disappointing, with China suffering a drop in both exports and imports and with industrial production in Italy softening as deflation worries persisted in France. Yet markets are stronger everywhere today. In Asia, that was partly explained by the largely expected but still significant news that China will allow Hong Kong shares to trade in Shanghai, marking a further easing in capital controls. But the real driver has been expectations of continued monetary accommodation from central banks. First, it was the minutes from the Federal Open Market Committee yesterday, which gave the impression that the Fed is eager to convey a message that it wants to keep providing long-term stimulus. Then it was the poor data in Europe, which, rather than unnerving investors, simply raised expectations that the European Central Bank will take aggressive steps to ward off deflation''.
''March trade data for China surprised sharply to the downside, but analysts noted that it was largely due to the distorting effect on the comparative from a year ago, when overinvoicing artificially inflated the value of exports as companies tried to skirt limits on bringing cash into the country. Exports dropped 6.6% on-year vs. 4.2% growth expected, while imports fell 11.3%, leading to a trade surplus of $7.7 billion after an unusual monthly deficit in February.
''March trade data for China surprised sharply to the downside, but analysts noted that it was largely due to the distorting effect on the comparative from a year ago, when overinvoicing artificially inflated the value of exports as companies tried to skirt limits on bringing cash into the country. Exports dropped 6.6% on-year vs. 4.2% growth expected, while imports fell 11.3%, leading to a trade surplus of $7.7 billion after an unusual monthly deficit in February.
The March trade data is important because it’s the first month not affected by the Lunar New Year distortion, and the headline figures raised questions about the strength of China’s economic growth. Still, most observers noted that overinvoicing was at its peak a year ago, so the apparent decline in exports especially should be taken with a big grain of salt (indeed, the decline compared to last year was most precipitous in exports to Hong Kong and Taiwan, the two key sources of false invoicing). Accounting for that discrepancy, analysts said exports likely grew 5%-7% on-year. More problematic is the decline in imports, which adds to the picture of China’s slowing growth. SpeakingThursday, Premier Li Keqiang reiterated that the leadership wouldn’t be troubled if growth comes in a bit below their 7.5% target for the year''.
