China’s exports drop in May as coronavirus pandemic hits overseas demand

China’s exports fell by 3.3 per cent in May, down from a surprise return to growth in April but a smaller drop than analysts expected

Imports plunged 16.7 per cent in May, deteriorating from April, a sign that demand remains weak in the world’s second largest economy

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China’s exports plunged in May on the back of falling demand from overseas markets hit by the coronavirus pandemic. Photo: Xinhua

Published: 11:17am, 7 Jun 2020Updated: 9:54am, 8 Jun 2020

China’s exports declined in May, as demand dried up in major overseas markets hit by the coronavirus pandemic, with experts predicting that shipments would continue to decline in coming months until the virus is brought under control and the global economy gets back on its feet.

Overseas shipments fell by 3.3 per cent in the month compared with a year earlier, following a surprise growth of 3.5 per cent in April. May’s export number was better than expected by a Bloomberg poll of analysts, whose median forecast was a 6.5 per cent decline.

The better-than-expected figure was due largely to continued strong exports of medical equipment and supplies used in fighting the coronavirus.

Exports of medical equipment and instruments rose 89 per cent in May from a year earlier, shipments of textiles, yarns and fabrics (including masks) rose 77 per cent, while exports of plastics (including medical protection equipment) increased 54 per cent, noted Shen Jianguang, chief economist of JD Digits, the fintech arm of e-commerce firm JD.com.

The outlook for Chinese exports in June and the second half of the year will depend on the development of the pandemic and the speed of the global economic recovery, Shen said. The demand recovery will lag that of supply, so Chinese exports will face greater pressure in coming months.

May’s export dip was telegraphed by persistently low sentiment among exporters that showed up in official and private surveys of factory owners.

The new export orders component of the official manufacturing purchasing managers’ index (PMI) was 35.3 for May, following a 33.5 reading in April. A number below 50 signifies contraction, the further below 50, the worse the mood among producers.

The Caixin/Markit manufacturing PMI, a survey of smaller factory owners, reported on Monday that “new export orders contracted at a historically sharp rate”.