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Published: Monday May 5, 2014 MYT 11:55:03 AM
Updated: Monday May 5, 2014 MYT 11:55:54 AM

China's trade situation to improve after May - commerce ministry

BEIJING (Reuters) - China's overall trade is likely to gain momentum after May when high base effects fade off and data more accurately reflects the underlying picture, the commerce ministry said in a report on its website.

External trade is looking in better shape this year than the previous year although uncertainties continue to weigh on exports, the ministry said in its quarterly report on foreign trade.

It noted that demand from emerging markets was constrained due to slower growth there while consumption from developed economies was also relatively soft.

China's exports unexpectedly fell for the second straight month in March and import growth dropped sharply, intensifying concerns about weak manufacturing and slowing growth.

Analysts have attributed the weak trade figures partly to an inflated comparison base with last year due to a rash of fake invoicing of exports to beat foreign exchange restrictions. The authorities have cracked down on such activities since May of last year.

"With the base effects that affect trade growth disappearing, the foreign trade data will reflect the situation more accurately and the situation is likely to improve after May," said the report on the ministry's website, www.mofcom.gov.cn, on Sunday.

Imports and exports in the first quarter were within a stable growth range after excluding the base effects and were better than other major economies, the ministry said.

"If there are no big changes in the external environment, China's imports and exports are likely to maintain relatively stable growth in 2014," the report said.

Still, exporters face increasing challenges including rising labour and land costs, appreciation of the yuan currency and trade friction, it added.

A private survey on China's manufacturing sector on Monday, and a separate one from the government last week, both showed export orders contracted in April.

China's Premier Li Keqiang said last week that China will step up support for trade, including quickening the pace of tax rebate payments for exporters, as part of policy measures to support a slowing economy.

China will release April trade data on Thursday.

(Reporting By Xiaoyi Shao and Jonathan Standing; Editing by Shri Navaratnam)

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