Foreign demand for Chinese exports significantly declined since May, showing that the pandemic is weighing on the country. Nonetheless, China continues to report on more substantial business activity domestically.
Foreign demand for Chinese goods significantly declined since May. A plunge in global commodity prices also compelled Beijing to purchase strategic resources. These include crude oil, despite the growing tensions between China and the US. The new figures also showed that the renminbi from the country's customs authority denominated last month.
The economic slowdown of several countries in China slowed down the demand for China's trading partners as well. Last month, China's overall exports increased by 1.4 percent on an annual basis after experiencing a significant increase last April by 8.2 percent. Overall, however, there was a recorded t3.3 percent drop during the first quarter. The differentiated results were said to be caused by a plunge on local demand.
Exports to the US and UK from China also fell by 11 percent, and by one percent during the first five months of the year. The values were caused by the struggle of Western countries to recover from the adverse effects of the pandemic. Furthermore, most countries were said to have a harder time reopening their economies despite significant drops in pandemic cases.
China's imports of crude oil and soybeans, on the other hand, dropped by 21 percent and 28 percent, respectively. The values were from last month's estimates compared to results from the previous year. The average purchase price of these two products was said to have dipped by 21 percent and two percent, respectively, compared to May's values.
According to an economist with Macquarie Group in Hong Kong Larry Hu, China's exports could experience more declines in the coming months. The said cause would be the slower pace of economic recoveries among developed countries.
Hu said that the market cannot experience a sharp rebound in foreign trade. The perception was due to the threat of a prolonged recession in a global perspective.
Additionally, an analyst with TS Lombard Bo Zhuang said that the dip underscored China's efforts in preparing for worsening trade environments with the US. He noted that China wants to restock on its crude oil and soybean supply in case the tensions would hinder the trade of these products.
On another note, Customs data from China showed that the country's imports for iron ore and copper improved by 3.5 percent and 21 percent by volume, respectively, in May.