China’s exports and imports fell in May as the economic slowdown abroad started to take its toll, and after a surprise jump driven by increased demand for anti-epidemic supplies, official data showed Sunday.
The country has worked to restart its economy after bringing activity to a standstill to curb the coronavirus spread, but consumer demand has remained muted and China’s key overseas markets are suffering downturns.
Exports from the manufacturing powerhouse fell 3.3% on-year last month, better than the 6.5% slide expected by a Bloomberg poll of analysts.
But the return to negative territory came after a surprise 3.5% jump in April, which was partly due to medical exports.
Analysts have warned of signs that a larger downturn awaits.
Customs data released Sunday showed a larger than expected plunge in imports on-year, which were down by 16.7%.
This was significantly higher than the 7.8% expected by analysts, and down further from the 14.2% drop in April.
“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.
But he noted the Purchasing Managers’ Index, a key gauge of factory activity, still pointed to “a deep downturn in exports that has yet to materialise” as activity in China’s major export markets remains subdued.
Cities in China have been rolling out measures to boost local demand, with Beijing announcing last week it would offer coupons worth 12.2 billion yuan ($1.7 billion) to spur consumption, according to state news agency Xinhua.
Meanwhile, China’s trade surplus with the US was up by 3.7% to $27.9 billion in May, from last year.
US-China tensions have risen again in recent months as both sides traded barbs over the pandemic and other areas.
With both sides hit by the virus, economists have called into question their ability to meet earlier commitments from a partial trade deal signed in January.