Taiwan’s exports surprisingly rose in July after four months of falls, but the government warned of uncertainties as global coronavirus cases spike and US-China tensions deepen.

Exports rose 0.4% from a year earlier to $28.2 billion in July, the finance ministry said. A Reuters poll had forecast an annual drop of 0.22%. In June, exports slipped 3.8%

Export trends show annual seafood shipments are estimated to amount to $2 billion. Major export markets are Japan, Thailand and the US, accounting for over half of Taiwan’s total fishery product exports by value.

The exports ministry said the “stay-at-home economy”, where millions of people worked from home to curb the spread of the coronavirus, boosted exports of telecommuting products such as laptops, which jumped 18.5% from a year earlier to a record high.

Beatrice Tsai, head of the ministry’s statistics department, expected exports in the second half to decline slightly from a year earlier, citing the impact from the pandemic.

Uncertainties remain for exports in the second half as strong technology demand for products such as semiconductors could be offset by the pandemic and rising geopolitical tensions, the ministry said.

Taiwan’s July imports fell 6.8% against economists’ expectations for a 3.1% decline.

Tech powerhouse Taiwan, whose largest trading partner is China, could see August exports come in within a range of -2.5% to -0.5% on the year, Tsai said.

In China, exports also confounded expectations by rising at the fastest pace in seven months in July.

While Taiwan has had relatively fewer coronavirus infections and managed to avoid a lockdown of its economy, the government has repeatedly warned of economic uncertainties and is rolling out a stimulus package worth T$1.05 trillion ($35.7 billion).

The island’s economy recorded its deepest contraction in nearly 11 years in the second quarter, as the pandemic dampened tourism although global demand for its tech exports helped counter the slowdown.

The economy contracted 0.73% in the April-June quarter from a year earlier, preliminary data showed last week, down from the first quarter’s 1.59% expansion.  Meanwhile, the United States is negotiating the sale of at least four sophisticated aerial drones to Taiwan for the first time, according to six US sources familiar with the negotiations, aircraft that can keep watch over huge swathes of sea and land.

The SeaGuardian surveillance drones have a range of 6,000 nautical miles (11,100 km), far greater than the 160-mile range of Taiwan’s current fleet of drones, potentially giving the island greater capacity to peer into China, observing its air force, missiles and other facilities.

While the State Department tacitly authorised the sale of the unmanned aerial vehicles, two of the people said, it is not known whether the US officials have approved exporting the drones with weapons attached, one of them said.

Seprately, Asia’s factory pain continued to ease in July with contraction slowing in big export-reliant nations, adding to hopes the region is steadily emerging from the devastating hit of the coronavirus pandemic.

Manufacturing activity in China expanded at the fastest pace in nearly a decade as domestic demand improved, a private sector survey showed on Monday, suggesting the world’s second-largest economy will help cushion the pandemic’s blow to world growth.

But worries about a second wave of infections may weigh on global demand and business sentiment, keeping any rebound in Asia’s factory output feeble, some analysts say.

Japan, for one, will enjoy only a “very gradual and protracted recovery” as concerns about a resurgence in COVID-19 cases will weigh on domestic and overseas spending, said Stefan Angrick, senior economist at Oxford Economics.

“With the pace of recovery slowing in some of Japan’s key trading partners, exports and business spending are likely to continue to struggle,” he said.

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index(PMI) rose to 52.8 last month from June’s 51.2, marking the sector’s third consecutive month of growth and the biggest jump since January 2011.

The upbeat findings echoed an official survey on Friday, adding to evidence the world’s second-largest economy is getting back on its feet faster than expected.

Japan and South Korea saw factory activity shrink at a much slower pace, a sign that pressures on manufacturers were easing and raising hopes the worst impact from the pandemic was over.

Reuters