China's May exports, imports seen recovering as supply chains restart – Reuters poll

BEIJING (Reuters) – China’s exports are expected to have expanded at a faster pace in May as factories reopened and supply chain disruptions calmed after Shanghai began to emerge from a lockdown, while imports also likely rose, a Reuters poll showed.

The recovery adds to evidence the world’s second-largest economy has begun to chart a path out of the supply-side shock that rocked world trade and global markets. However, China’s trade outlook faces risks from factors such as high raw material costs, uncertainties from the Ukraine war and as recovering production overseas affects demand for Chinese goods.

Official and private surveys showed China’s factory activity contracted at a slower pace in May as COVID-19 curbs in major manufacturing hubs eased, with a gauge on export orders improving.

Exports in May likely grew 8.0% from a year earlier, accelerating from a 3.9% expansion in April, according to a median forecast in a Reuters poll of 28 economists.

Major automakers ramped up production in May. Electric car maker Tesla reopened its factory in Shanghai on April 19 after a 22-day stoppage, but only returned to pre-lockdown production levels in late May.

Shanghai’s COVID-19 lockdown, which officially ended on June 1, snarled logistics and regional supply chains but there are signs of a turnaround.

Official data showed the average daily container throughput at the Port of Shanghai rose 7% in May from a month earlier.

“COVID disruptions to logistics, production and customs clearing seem to have started to ease since late April,” said analysts at UBS, adding that South Korea’s strong trade data in May likely pointed to still strong global demand.

A low base of comparison from a year earlier also likely contributed to the rebound in export growth, according to Zhang Yu, chief analyst of Huachuang Securities.

Imports were expected to have risen 2% year-on-year in May, the poll showed, likely driven by imports of raw materials and intermediate goods as domestic production resumed. That compared with flat growth in April.

China’s trade surplus is likely to have widened to $58 billion from $51.12 billion in April.

Trade data will be released on Thursday.

Economic activity cooled sharply in April as the country grappled with the worst COVID-19 outbreak since 2020.

To stabilise the situation in a politically sensitive year, China’s cabinet recently announced a package of 33 measures covering fiscal, financial, investment and industrial policies, although analysts say the official GDP target of around 5.5% will be hard to achieve without easing the zero-COVID strategy.

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