The economic hub started going under a lockdown in late March and most of its 25 million residents were confined to their homes for around two months as China persists with its zero-Covid strategy. Strict movement restrictions in multiple cities -- sometimes over just handfuls of cases -- kept consumers at home and battered the economy, dragging retail sales, factory output and export growth to their lowest levels in about two years.
But as curbs began to ease, overseas shipments from the world’s second-biggest economy bounced back 16.9 percent on-year in May, up from 3.9 percent in April, according to customs data released on Thursday. “The export rebound is actually quite surprising... I believe that’s mainly because of the Shanghai port,” said Iris Pang, ING’s chief economist for Greater China. The world’s busiest container port was running at around 90 percent capacity in late May, boosting shipments, she added. The data suggests that China is “becoming more agile at dealing with Covid flare-ups” while keeping exports running, said Stephen Innes, managing partner at SPI Asset Management.
But this could also mean “less incentive” for officials to move away from a zero-Covid strategy quickly, he added. Analysts polled by Bloomberg had expected a spike of around eight percent in exports. “If (US) tariffs are lifted... there will be even stronger growth,” Pang said, referring to remarks by Treasury Secretary Janet Yellen that the United States is considering lifting some tariffs imposed during the Trump administration. Some observers warned that the rebound could be short-lived.
“Extensive disruptions in the Yangtze River Delta in the past couple of months and Beijing’s determination to carry on with its zero-Covid strategy may cause some foreign customers to shift their orders to... neighbouring countries,” Nomura analysts said in a recent note. Shanghai’s announcement Thursday that it will lock down a district of 2.7 million people reflected lingering risks. Imports rose 4.1 percent last month, according to customs data, also beating expectations. China’s trade surplus was around $79 billion in May, up from $51 billion in April, the Customs Administration said.