China trade: export growth rebounds but ‘likely to be a temporary blip’, imports also beat expectations

• Exports grew by 16.9 per cent in May compared with a year earlier, up from 3.9 per cent growth in April
• Imports grew by 4.1 per cent in May compared with a year earlier, up from an unchanged reading in April

China’s export growth rebounded in May, data released on Thursday showed, while import growth also beat expectations.

Exports grew by 16.9 per cent last month from a year earlier to US$308.25 billion, compared with an unchanged reading in April.

The May figure was above expectations of a rise of 7.3 per cent, according to Wind, a leading provider of financial information services in China.

Imports, meanwhile, grew by 4.1 per cent in May from a year earlier to US$229.49 billion, compared with 3.9 per cent growth in April.

The May figure was also above expectations of a rise of 0.6 per cent, according to Wind.

Overall, China’s total trade surplus was US$78.76 billion in May versus US$51.12 billion in April.

“Export and import year on year growth picked up last month. In volume terms, exports rebounded while imports were largely unchanged. We think outbound shipments will soften again before long amid growing headwinds, while imports are set to remain weak,” said Sheana Yue, China economist at Capital Economics.

“The rebound in exports in May is likely to be a temporary blip as virus disruptions were eased. Given growing headwinds to exports, we continue to expect a fall in outbound shipments over the coming quarters.

For a start, shifts in global consumption patterns that have supported Chinese exports will unwind coming out of the pandemic. What’s more, high inflation and rising interest rates in many key markets for Chinese exports will weigh on household purchasing power of consumers there.”

China’s customs office noted that the Association of Southeast Asian Nations (Asean), the European Union, the United States and South Korea were China’s top four trading partners in the first five months of the year.

It also noted that trade growth in private sector had also picked up.

China’s trade has been disrupted due to the latest coronavirus outbreaks and resulting lockdowns, Shanghai only ending its two-month shutdown last week.

The Port of Shanghai is the world’s busiest in terms of container throughput and a major gateway for goods produced in nearby manufacturing hubs, and even though it was operational during the citywide lockdown, capacity was largely restrained because of the reduced availability of goods.

Last month, Beijing announced a 33-point relief package – including the fast-tracking of infrastructure projects, loan extensions, tax breaks and rebates – after Chinese Premier Li Keqiang issued a rare warning about a potential contraction of gross domestic product (GDP) in the current quarter and vowed that these measures would help get the economy back on track.

Li Xingqian, an official with China’s Ministry of Commerce, said on Wednesday that some foreign trade orders, which returned last year due to the coronavirus outbreaks in neighbouring countries, have now left China and returned to the neighbouring regions.

But Li stressed that the scale is largely under control and that the impact is limited.

Authors: Andrew Mullen, Orange Wang, SCMP