The Chinese economy is still struggling to recover from the pandemic

The Chinese economy is still struggling to recover from the pandemic

Exports in the world’s second-largest economy fell 3.3 percent in U.S. dollars last month from a year earlier, customs data released this weekend showed, carrying a 3.5 percent rise in April.

Analysts attribute the decline to weak demand abroad: While China began reopening its economy a few months ago, many other world powers have only just begun to lift some stalemate measures in recent weeks.

Recovery at home was not entirely smooth for China either. Imports fell 16.7% in US dollars last month from a year earlier – the deepest drop since January 2016 – suggesting that domestic demand remains slow.

“Import data point to a weaker domestic economic trajectory after opening than you fear, even as China begins to increase spending on infrastructure,” Mitul Kotecha, a senior emerging markets strategist, TD Securities, wrote on Monday.

China – which had struggled with a slow economy even before the virus attack – was trying to make its way out of the downturn. The country promised last month throw 3.6 trillion yuan ($ 500 billion) this year in its economy in tax cuts, infrastructure projects and other incentives as part of efforts to create 9 million jobs and prevent falling out of the pandemic.

And there are at least some signs of a recovery in demand, encouraged by more generous cash brochures. Passenger car sales rose in May for the first time in 11 months, according to data released by the China Passenger Car Association on Monday. The country sold 1.6 million new passenger cars last month, up 1.8 percent from a year ago.

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But trade remains a sensitive place for China, which is managing escalating tensions with the United States. Mutual blame for the pandemic has worsened the relationship between the world’s most important economic superpowers, which could jeopardize their fragile trade truce.

Data for May showed a record trade surplus of $ 62.9 billion, according to Koecha of TD Securities. President Donald Trump has often criticized China for running a huge trade surplus with the United States.

However, economists of the capital economy expect Chinese exports to continue to weaken in the short term, before stabilizing later in the year.

They wrote in a research note on Monday that they expect a drop in global growth to “slow the bottom of this quarter”, putting exports to the bottom in the last half of 2020.

Economists of the capital economy also expect that China’s stimulus measures “should encourage a strong recovery in imports.”

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