China’s May exports, imports seen recovering as supply chains restart
BEIJING, (Reuters) – China’s exports will have increased at a quicker pace in May, as factories reopened, supply chains were calmed, and Shanghai emerged from a lockdown. However, imports likely rose, according to a Reuters poll.
As evidence, the recovery shows that China’s second-largest economic country has begun to map a course out of the supply-side shock which rocked international trade and global markets. China’s trade outlook is still uncertain due to high raw materials costs and uncertainties from Ukraine, as well as the impact of recovering production abroad on Chinese demand.
According to both official and private surveys, China’s factories contracted slower in May due to COVID-19 curbs at major manufacturing hubs. A gauge for export orders also improved.
According to a median forecast by Reuters of 28 economists, May’s exports likely grew 8.0% compared with a year ago. This was an acceleration from April’s 3.9% growth.
Major automakers increased production in May. After a 22-day shutdown, Tesla (NASDAQ) opened its Shanghai factory on April 19, but it only returned to production levels at the end of May.
Shanghai’s COVID-19 lockdown ended officially on June 1. It slowed logistics and regional supply chains, but signs are beginning to show a recovery.
The average container throughput in Shanghai increased by 7% per day, according to data from the Port of Shanghai. This was compared with a month prior.
Analysts at UBS stated that COVID disruptions in logistics, production, and customs clearing have begun to ease since April. They also noted that South Korea’s May strong trade data likely indicated strong global demand.
According to Zhang Yu (chief analyst at Huachuang Securities), the rebound in growth of exports may have been due to a lower base of comparability than a year ago.
According to the poll, imports in May were likely to have increased 2% year over year. This was most likely because of an increase in imports for raw materials and intermediate products as domestic production resumed. This compares to flat April growth.
China’s trade surplus in May will have grown to $58 billion, from $51.12 billion.
The Thursday release of trade data is scheduled.
The worst COVID-19 epidemic since 2020 caused a sharp drop in economic activity.
China’s cabinet announced recently a 33-point package covering financial, industrial, and investment policies to stabilise the country in an extremely sensitive year. Analysts warn however that it will be difficult to reach the official GDP target at 5.5% without changing the zero-COVID policy.