Chinese business is reopening in unstable economic landscape

Source: Baidu; China National Bureau of Statistics; Haver Analytics; Wind; World Bank.

China’s exports unexpectedly rose in April, but imports fell the same month as movement restrictions to contain the coronavirus outbreak eased. According to data from the General Administration of Customs exports rose 3,5% from a year ago while imports fell 14,2% in the same period.

In March, China’s exports fell 6,6% compared to 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, the largest since December last year when the surplus was about $47 billion.

By April the European Commission estimated a 9,7% decrease in global trade, which is translated for the EU-27 in a loss of exports of Euro 285 billion and Euro 240 billion in imports (19% of which were from China). Combined sources show for China a steep loss in industrial profits (-30% approx.) and in general government revenue (-15% approx., see figure).

Even though China looks like having turned the corner in the pandemic, with domestic tourism showing clear signs of recovery, the country has seen its economy shrink in the first three months of the year since it started recording quarterly figures in 1992.

The GDP contraction in January-March will translate into permanent income losses, reflected in bankruptcies across small companies and job losses.

There are also concerns over China’s current political standoff with the USA over the coronavirus pandemic, with President Donald Trump threatening additional tariffs on China in retaliation for the outbreak.

Chinese businesses are reopening and getting back to work after the ruling Communist Party declared victory over the disease last month. However, the virus is anything but vanished. A series of new coronavirus cases in the far north-eastern province of Heilongjiang is raising concern that a second wave of the virus could emerge in the Asian country.  

Since mid-April, several clusters of coronavirus infection have been reported in Heilongjiang province’s major cities. The province now has 386 active symptomatic cases and 116 recovered cases. Officials claim that all of the currently active cases are “imported”, with most of them being Chinese nationals returning from Russia.

Meanwhile 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 Johns Hopkins University. Many economies have come to a halt due to widespread lockdowns, hitting consumption and demand.