China’s trade revs up in May as COVID curbs ease

Reuters

13:16 JST, June 9, 2022

BEIJING (Reuters) – China’s exports grew at a double-digit pace in May, shattering expectations, while imports expanded for the first time in three months as factories resumed production and logistics snags eased after authorities relaxed some of the COVID curbs in Shanghai.

The stronger-than-expected headline figures add to encouraging signs that the world’s second-largest economy has started to chart a path out of the supply-side shock that has rocked global trade and financial markets in recent months.

However, China’s trade outlook faces risks from factors such as high raw material costs and uncertainties from the Ukraine war. Recovering production in other economies also could affect demand for Chinese goods.

Outbound shipments in May jumped 16.9% from a year earlier, the fastest growth since January this year, and more than double analysts’ expectations for a 8.0% rise. Exports were up 3.9% in April.

Economic activity cooled sharply in April as the country grappled with the worst COVID-19 outbreak since 2020. Stringent lockdown measures, sometimes excessively enforced by local officials, had clogged highways and ports, stranded workers and shut factories.

To stabilize the situation in a politically sensitive year, the State Council has called on local officials to revive supply chains, restore economic growth and rein in unemployment. Major automakers have been able to ramp up production in May and cargo handling capacity at ports and airports are returning closer to pre-lockdown level.

Electric car maker Tesla TSLA.O reopened its factory in Shanghai on April 19 after a 22-day stoppage, and returned to pre-lockdown production levels in late May.

The Shanghai port, which was running at severely reduced capacity in April, has also been handling more cargos since last month, with official data showing that daily container throughput at the world’s biggest port back to 95.3% of the normal level in late May.

Official and private surveys showed China’s factory activity contracted at a slower pace in May as COVID-19 curbs in major manufacturing hubs eased, with a gauge on export orders improving.

Thursday’s data showed imports rose 4.1% in May from a year earlier, the first gain in three months and compared with flat growth in April. They were expected to rise 2.0%.

China posted a trade surplus of $78.76 billion last month, versus a forecast for a $58 billion surplus in the poll. The country reported a $51.12 billion surplus in April.

China’s cabinet recently announced a package of 33 measures covering fiscal, financial, investment and industrial policies, although analysts say the official GDP target of around 5.5% for this year will be hard to achieve without doing away with the zero-COVID strategy.