By Joe Cash

BEIJING (Reuters) – China’s exports likely returned to growth in April after contracting sharply in March, but the expansion is expected to be modest as factory owners wrestle with weak overseas demand and overcapacity that is pushing down their selling prices.

Trade data for April is expected to show outbound shipments grew 1.5% year-on-year by value, according to the median forecast of 31 economists, reversing the 7.5% slump recorded in March.

China’s economy grew faster than expected in the first quarter, although data on exports, consumer inflation, producer prices and bank lending for March showed that momentum could be faltering again, while a protracted property crisis is showing few signs of abating, spurring calls for more policy stimulus.

China watchers are struggling to make sense of the mixed data coming out of the world’s second-largest economy, which was reflected in the trade poll.

Goldman Sachs forecasted China’s exports grew 5.5% last month, the poll’s highest prediction, while Societe Generale, conversely, predicted a drop of 3.4%. Economists at Peking University saw a 5.7% fall, the lowest projection.

In the first quarter, both imports and exports rose 1.5% year-on-year.

Analysts say Chinese exporters are continuing to slash prices to maintain sales abroad amid stubbornly weak domestic demand, evidenced by the fact that export volumes edged up to record highs in March.

A higher base of comparison last year also likely contributed to the export drop, economists said, given that production had jumped last March as many workers recovered from a wave of COVID infections.

Chinese exporters had a tough time for most of last year as soaring interest rates weighed on overseas demand. With the Federal Reserve and other developed nations showing no urgency to cut borrowing costs, manufacturers may face further strains as they battle for market share.

China’s imports likely increased 4.8% in April, according to the poll, following a 1.9% drop in March.

Again, economists were divided, with Standard Chartered forecasting a 9.8% jump in imports, ahead of Barclays, which expected a 7.0% increase. Goldman Sachs anticipated inbound shipments to have grown 5.0%, while Peking University saw a 1.3% increase.

South Korean exports to China, a leading indicator of China’s imports, jumped 9.9% in April, sharply up from a 0.4% rise in the prior month.

The median estimate in the poll predicted China’s trade surplus will come in at $77.5 billion.

The data will be released on Thursday.

(Reporting by Joe Cash; Polling by Milounee Purohit and Susobhan Sarkar in Bengaluru and Jing Wang in Shanghai; Editing by Kim Coghill)

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