Hong Kong’s exports surprisingly improve, but China curbs hurt

Hong Kong’s exports surprisingly ticked up in April, though trade with China continued to be hit as the country’s Covid restrictions intensified and disrupted trade.

Overall exports rose 1.1% last month from a year earlier, the Census and Statistics Department said Thursday. Economists had expected a drop of 6.9%.

Imports expanded 2.1% in the month, compared to economists’ forecast of a 6.9% decline. The trade deficit was HK$36.6 billion ($4.7 billion), compared to HK$37.3 billion in March.

Despite the unexpected improvement, trade with China was hammered as Covid-related restrictions weighed on logistics and supply chains. The value of exports to China fell 9.4%, the statistics bureau said—though that was better than in March, when exports from Hong Kong to China dropped 12.8%.

The latest data comes after Hong Kong’s exports plunged in March by the most since January 2020, worse than economists’ expectations at the time as China’s Covid curbs weighed more than projected on trade. Lockdowns in China have snarled logistics and supply chains.

Others in the region have also seen trade impacted in recent months by the lockdowns in China. Taiwan’s export orders fell in April for the first time since 2020 as Chinese restrictions weighed on production capacity for major Taiwanese companies. And in South Korea, exports to China have continued to show weakness.

Hong Kong’s disappointing trade performance in March also contributed to the city’s first economic contraction in more than a year. Gross domestic product fell 4% in the January-to-March period from a year earlier, far worse than economist expectations.

Authorities also recently cut the city’s economic growth forecast for the year, and now expect GDP to expand in a range of 1% to 2%, compared with a previous prediction of 2%-3.5%. The expectations of a deteriorating outlook for exports was a factor in that downward revision.