Daily Management Review

China’s May Exports Drop While Imports Plunge Because Of Pandemic Hit To Global Growth


China’s May Exports Drop While Imports Plunge Because Of Pandemic Hit To Global Growth
The slowdown in the wider export market resulted in a drop in the exports of China for the month of May, according to official data from the second largest economy of the world. This was preceded by a surprise jump in the previous month hat was mostly because of export of products related to the novel coronavirus pandemic.
Following a very strict lockdown of its economic activity for most part of the first quarter and well into the second quarter, the country has now worked hard to restart economic activities after lifting the lockdown. However, there has been muted consumer demand and severe downturns in the key overseas markets of China has made recovery very slow .
Last month, China reported a drop of 3.3 per cent year on year drop in exports which was however better than the drop that the markets were expecting at 6.5 per cent.
However in the previous month, China sprang a surprise for the market after reporting a jump of 3.5 per cent year on year in exports which was driven mainly by exports of coronavirus related goods. 
Analysts have however issued caution of emerging signals of an impending downturn.
Data from Customs department of China show a larger than expected drop in imports year on year which were down by 16.7 per cent. This drop in imports was significantly higher than what the markets and analysts had expected which was at 7.8 per cent and was more than the drop in imports reported in April which was at 14.2 per cent.
"Export growth rebounded in March and April, even as lockdowns came into effect abroad, because of a backlog of orders that had piled up while Chinese factories were shut in February," said Julian Evans-Pritchard of Capital Economics in a recent report.
He however also simultaneously noted the number of the Purchasing Managers' Index, which is a crucial gauge of factory activity, and pointed to "a deep downturn in exports that has yet to materialise" because of subdued activities in the major export market of China.
Measures to increase local demand have been rolled out by cities in China. For example, according to state news agency Xinhua, last week authorities in Beijing announced that the city would offer coupons worth 12.2 billion yuan ($1.7 billion) in order to boost domestic consumption.
On the other hand in the month of May, the trade surplus of China with the United States grew by 3.7 per cent year on year to touch $27.9 billion.
In recent months there has been a reigniting of the US-China tensions as both countries traded barbs over the pandemic and other areas.
Economists are now questioning the capacity of both the countries to meet earlier commitments from a partial trade deal signed in January given the economic impact that both the countries are suffering because of the pandemic.