China’s dollar-denominated exports unexpectedly rose in April, but imports fell in the same month as movement restrictions to contain the coronavirus outbreak have eased.
According to data from the General Administration of Customs released last week, exports rose 3.5% from a year ago while imports fell 14.2% in the same period.
Economists had expected exports to have fallen 15.7% in April from the previous year, while imports were expected to have fallen 11.2% within the same period.
In March, China’s exports fell 6.6% from a year ago, while imports slipped 0.9% in the same month.
China’s trade surplus for the month of April was $45.34 billion — compared to the $6.35 billion economists had predicted, additionally, China reported a trade surplus of $19.9 billion for the month of March.
China’s trade surplus in April was the largest since December of last year when the surplus was approximately $47 billion.
Ahead of the data release, Liu Li-Gang, Chief Economist for China at Citigroup, said the country’s medical exports likely rose in April as it shipped health-care goods to the rest of the world.
“The number in the early part of April was very strong already,” Liu told CNBC before the official data was released.
Nomura economists noted a surge in the exports of antivirus medical supplies with the export value of such items jumping from about 1 billion Chinese yuan ($141 million) between April 1st to April 10th, to more than 3 billion Chinese yuan ($423 million) in late April, as outlined in an analysis of the customs data last week.
The export of such medical supplies — which includes 27.8 billion face masks and 130 million protective suits — could have boosted headline export growth in March and April by as much as 2.7% from a year ago.
Factories were also likely fulfilling a backlog of orders as Chinese workers gradually headed back to work after an extended lockdown from late January.
“But this prop should soon fade, with exporters unlikely to be immune from the sharp slowdown in global activity for long,” said Julian Evans-Pritchard, Senior China Economist at Capital Economics. “Global demand will likely remain weak for months,” he added.
Nomura analysts also said April’s export growth would not be sustainable, with growth likely to drop significantly in May and June.
Two separate manufacturing Purchasing Manager’s Index surveys showed activity was weak for the month of April as export orders dropped.
Chinese businesses are reopening and getting back to work as the daily number of new coronavirus cases slow in the country.
However, the situation remains serious in the rest of the world with more than 3.74 million people infected so far, according to data compiled by The Johns Hopkins University. Many economies have come to a halt due to widespread lockdowns, hitting consumption and demand.
Even though China looks like it’s turning the corner in the pandemic, with domestic tourism returning over the Labor Day holidays from May 1-5, challenges still remain where demand is concerned, said Helen Qiao, Head of Asia Economics at BofA Securities.
There is some pent-up demand after lockdowns, but low-income households have been hit much more by the movement restrictions, Qiao told CNBC last week before the data release.
Spending on services would also be lower than a year ago. “People may feel probably a bit worried or nervous about going to malls, to dine there, or to stroll around, or to send their kids to their English extracurricular education center etc.,” said Qiao.
There are also concerns in regards to China’s current political standoff with the U.S. over the coronavirus pandemic, with President Donald Trump threatening additional tariffs on China in retaliation for the outbreak.