In the midst of the coronavirus crisis, China recorded a significant contraction in its exports last May. Imports also suffered a larger than expected decline. This demonstrates how the weak global economic climate is negatively affecting China's manufacturing sector.
This past Sunday (May 07), the official statistics that have been released are quite worrying and preoccupying the population. Therefore, the Chinese leaders are obliged to take consequent measures to save this sector which employs more than 180 million people.
Indeed, Chinese customs data showed that overseas deliveries were down in May compared to the performance recorded in April. The figures are 3.3% on an annualized basis for May, compared to 3.5% on an annualized basis for April.
Last month was marked by a 16.7% drop in imports at an annual rate. This is their lowest level in four years, since January 2016. That said, China's trade surplus is estimated at $62.93 billion in May compared to $45.34 billion in April. These figures are much higher than the $39 billion that economists had anticipated.
However, it should be noted that there has been a $27.89 billion increase in China's trade surplus with the United States. This data was provided through Chinese customs statistics in the period when there had been strong tensions between these two great world powers. However, secret and official investigations were carried out at the factory level. These showed a series of significant contractions in export orders.
In view of the uncertainty, the Chinese government preferred to refrain from setting an annual growth target. This is a first since 2002. In fact, China has just experienced its first contraction in the first quarter since 1992.
As a result of the contraction of the export order sub-indexes, Chinese industrial companies saw their profits fall by almost 30% from January to April.
However, experts said that the mass export of medical supplies masked the exporters' headwinds. In other words, while China held the title of best medical supplies exporter, exporters were experiencing a slump in inventories and then order cancellations.
As proof, China exported 63.2 billion yuan worth of medical supplies in the first half of May. Yes, and this is a performance that hides the difficulties encountered by traditional export companies.
As a result, the Chinese economy shrank by 6.8% in the first quarter compared to 2019. This state of affairs could cause negative growth in Chinese exports in the future and even more than that.