China’s exports likely tumbled in May after a surprising rebound the previous month as global coronavirus lockdowns continued to devastate demand, but imports showed some signs of improvement as Chinese manufacturers got back on their feet, a Reuters poll showed on Friday.
May exports in the world’s second-largest economy are expected to have contracted 7% from a year earlier, according to a median estimate from the survey of 23 economists, compared with an unexpected 3.5% gain in April.
Imports likely fell 9.7% on year, the poll showed, easing from a 14.2% drop the previous month, due to recovering global oil prices, a low base last year and as manufacturers cranked up operations.
Both official and private factory surveys for May showed sub-indexes for export orders remained in contraction, suggesting strong external headwinds on Chinese exporters in the near term.
Highlighting the uncertain outlook, the government said in late May it was not setting an annual growth target, for the first time since 2002. The economy shrank 6.8% in the first quarter from a year earlier.
“Despite stronger-than-expected export growth in April, we still believe China’s export growth may slump sharply in coming months, as the lagged impact from the slump in new export orders in March, April, and even May, could fully kick in,” Nomura said in a report. It estimated exports fell 8% in May.
Many Chinese exporters, stuck with unsold stock and cancelled orders from abroad, are cutting staff and moving into e-commerce to target the domestic market.
“The orders are all gone. I’ve been in the industry for 15 years and this year is so extraordinary,” Deng Jinling told Reuters from her vacuum flask showroom in Yiwu, China’s export capital for small commodities.
The one bright spot has been exports of medical supplies. In the first half of May, China shipped 63.2 billion yuan ($8.9 billion) of medical supplies, Reuters calculations from customs data showed, compared with 71.2 billion yuan in the March-April period.
China’s economy, which reopened earlier than other world economies, is gradually recovering from lows struck in February when the government imposed widespread social restrictions and closed factories to curb the spread of the respiratory illness.
“We’re seeing domestic spending slowly recover, which is driving consumption. A lot of the sectors are not back 100% yet but certain sectors are actually getting back stronger than pre-COVID,” said How Jit Lim, managing director at management consultancy Alvarez & Marsal.
“One example is the truck market. We’re expecting 2020 to be a record year in China in terms of new truck sales,” said Lim, adding that the surge is driven by the demand for eco-friendly trucks and increased government infrastructure spending.
Citing strong pent-up demand, a large rebound in infrastructure investment and a pandemic-related surge in demand for medical products, Nomura raised its GDP forecast for the second quarter to growth of 1.2%, from a contraction of 0.5%.