BEIJING (dpa-AFX) - China's exports are set to remain weak in the months ahead largely due to the sharp decline in export-order driven imports, Iris Pang, an ING economist, said.
Data released by the General Administration of Customs over the weekend showed that exports decreased 3.3 percent on a yearly basis in May. At the same time, imports logged a sharp contraction of 16.7 percent.
Consequently, the trade surplus rose to $62.9 billion in May from $45.3 billion in April.
The economist said the deep dive of imports means that exports in the coming months will be weak. This is because some imports are used as parts for export products. This also implies foreign buyers did not expect a rebound of demand for their products, Pang noted.
Moreover, global demand for some Covid-19 related goods and supplies should slow down when pandemic subsides. 'This is also one of the reasons we believe that this less dismal export growth may not be sustainable, the economist said.
If China retaliates against the US action of including 33 Chinese entities to its 'entity list' of export controls, this would hurt the transfer of technology.
Pang said the central bank is unlikely to use the exchange rate to help exports or as a tool for retaliation. Yuan depreciation cannot change the landscape of weak global demand and cannot slow down friction between the US and China, she added.
The trade of electronics contributes around half of the total trade of China. As mechanical and electronic parts make a large portion of world trade, overall exports and imports will be under pressure until global consumption picks up, the economist observed.
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