A rebound in exports could reach double digits.
China’s export growth likely accelerated in May as major ports emerged from Covid-19 curbs, while imports were expected higher on improved demand, according to analysts.
Median forecasts for Thursday’s trade data anticipated exports jumping 8% y/y, up from a 3.9% gain in April, while imports were expected to have risen 2.5% y/y, quickening from the previous flat level.
Gradually normalising customs clearances in Shanghai and robust external demand should drive exports 10% higher versus a low base a year ago, according to a Huachuang Securities research note.
Exports handled by Shanghai customs, usually accounting for up to 20% of the national total, slumped 44% y/y in April as the city applied strict travel restrictions and factory shutdowns to stymie the spread of Omicron, according to the analysts, noting an easing of Covid curbs in May.
Eight major ports saw foreign trade container throughput increase by 1.7% and 7.2% y/y in early and mid-May respectively, faster than in April, according to the China Ports & Harbours Association.
With factories reopened and supply chains restored, manufacturing activities recovered from April’s low ebb. The new export orders sub-index in May’s official manufacturing PMI rebounded by 4.6 points to 46.2, while the import sub-index rose by 2.2 points to 45.1. (See MNI: China Factory Data Offers Light As Covid Curbs Ease)
Strong South Korean May trade data, with exports of semiconductors, petrochemicals, steel, and petroleum products hitting record highs for the period, pointed to sustained robust global demand, Huachuang analysts noted. South Korea’s exports to the U.S. and EU in May registered over 20% y/y growth, and while its exports to China rose only 1.2%, this reversed April’s 3.4% decline, indicating a slight improvement in domestic demand, said the analysts.
Chinese imports should be supported by recovering domestic demand as authorities move to bolster growth with pro-growth measures, as well as by new trade policies introduced in May including a provisional zero import tax for coal, according to a report by the National Center for Economic Research at Peking University.
Prices of crude oil and natural gas are still at high levels, which will continue to boost import payments, the report added.