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China Trade Quarterly (Jun 2016)

Domestic Trade
Retail sales of consumer goods reached 10,267.0 billion yuan in January to April 2016, up nominally by 10.3% yoy. Online retail sales of goods, which accounted for 11.1% of total retail sales, surged by 25.6% yoy in the period.

Prices of industrial products show signs of bottoming out. The producer price index of industrial products rose by 0.7% mom in April, posting month-on-month gains for two consecutive months.

Household income posted impressive growth in 1Q16. The per capita disposable income of rural households increased nominally by 9.1% yoy in 1Q16; while that of urban households rose by 8.0% yoy in nominal terms.

The government has strengthened support to the property market through taxation policies, but it has tightened property policies in some first-tier cities to cool down their property markets. The government has announced to strengthen financial support to new consumption areas, such as elderly care, smart devices, online retailing, tourism and culture.

Macroeconomic targets set for 2016. During the fourth session of the 12th National People’s Congress, the government set a real GDP growth target of between 6.5% and 7.0% for 2016, so as to ensure employment and promote the well-being of the people.

Confidence among Chinese entrepreneurs in the secondary industry dropped at a slower pace in 1Q16. The Entrepreneur Confidence Index for the secondary industry fell by 0.2 pts to 108.7 in 1Q16, after falling by 3.2 pts in 4Q15.

The manufacturing sector returns to expansion. PMI came in at 50.1 in May, staying above the critical 50-mark for three consecutive months.

Foreign Trade
Both exports and imports posted year-on-year drop in April. Exports and imports were down by 1.8% yoy and 10.9% yoy respectively in the month.

Exports to the US and the ASEAN fell by 8.8% yoy and 13.7% yoy respectively in 1Q16. Exports to the EU and Japan dropped by 6.9% yoy and 5.5% yoy respectively over the same period.

All top six provinces/ municipalities in terms of exports witnessed negative year-on-year growth in exports in 1Q16. Among these provinces, Guangdong saw the sharpest fall in exports (minus 10.9% yoy).

FDI grew by 1.5% yoy to reach US$ 35.4 billion in 1Q16. The share of the service sector in the total FDI went up to 68.8%, while the share of the manufacturing sector fell to 30.4%.

Foreign exchange reserves posted month-on-month gain in March. China’s foreign exchange reserves increased by US$ 10.3 billion in March, amounting to US$ 3.21 trillion as at the end of March.

Chinese yuan depreciated against its trading partners by 3.1% in real terms in the first four months of 2016, according to the Bank for International Settlements.

China has launched measures to boost foreign trade. The government will increase fiscal and financial support to trade enterprises, strengthen traditional competitive advantages and nurture new competitive advantages for foreign trade, and improve the structure and environment of China’s foreign trade.

Tax policy on imported goods purchased from cross-border e-commerce platforms has been changed. Under the new policy, effective from 8 April, the government levies import tariffs, import value-added tax and consumption tax on imported goods purchased from cross-border e-commerce platforms. Before the introduction of the new tax policy, imported goods purchased from cross-border e-commerce platforms were subject to personal postal articles tax.

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Content provided by Fung Business Intelligence
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