Bengaluru: The impact of the COVID-19 global pandemic has begun to pinch China where it affects it the most: Exports.
The bulk of the Chinese economy is export-based and the country may be heading for more pains in the coming months, according to an article in South China Morning Post, a Hong-Kong-based English language newspaper owned by Alibaba Group.
In May, Chinese exports fell by 3.3 percent, compared to the previous year, although April 2020 had reported a 3.5 percent growth, the paper said.
Earlier a Bloomberg’s poll analysis for May, as a median forecast, had predicted a 6.5 percent decline. However, China managed to export good quantities of medical equipment and supplies. Chief Economist Shen Jianguang of JD Digits, the fin-tech arm of e-commerce firm jd.com, said the export of medical equipment’s and instruments rose by 89 percent, shipments of textiles, yarns, and fabrics, including masks, rose by 77 percent, and that of plastics, including medical protection equipment, increased 54 percent.
But other exports to the US and EU fell by 1.2 percent and 0.6 percent respectively.
Imports also fell by 13.5 percent year-on-year in May, and from the EU by 29 percent, underscoring weak domestic demand in China.
Shen said the vantage point for Chinese exports in June and the second half of the year will be contingent on the growth of the pandemic and the swiftness of the global economic retrieval. The demand resurgence will delay supply, so Chinese exports will face bigger pressure in the months to come.
May’s export slope was envisioned by low sentiment among exporters which were reflected in official and private studies of factory owners.
The Caixin/Markit manufacturing PMI, a study of smaller factory owners, stated that the “new export orders contracted at a historically sharp rate”. A dip in overall exports was prevalent compared to last year, led by a 5.7 percent decline in shipments to the 10 members of the Association of Southeast Asian Nations (ASEAN).
In the first five months of the year, the export of mechanical and electrical products, clothing, apparel, mobile phones, furniture, shoes and boots, toys, and luggage have all been down as the coronavirus after-effects have led to reduced demand in China’s main export markets.
Meanwhile, it said, the May imports also plunged by 16.7 percent in comparison to last year, weakening from a drop of 14.2 percent during April thus signaling a weak economic demand at home.
The two months of decline in imports is attributed to sharpening lower oil prices.
The enduring pandemic has dried up in the overseas market, with experts predicting a further decline in the coming months too.
As imports fell much faster than exports China’s trade surplus reached its highest level in the last 30 years as it surged from US$45.34 billion in April to US$62.93 billion in May.