Chinese exports contracted more than expected in May on weaker global demand for the country’s goods, as the world’s second-largest economy struggled to revive growth after a pandemic-induced slowdown last year.
Exports contracted 7.5 per cent compared with the same period a year earlier, China’s General Administration of Customs said, well below analyst forecasts of an 0.4 per cent fall, according to a poll conducted by Reuters.
Imports performed better than expected, however, down 4.5 per cent year on year, compared with analysts’ expectations of an 8 per cent fall. This left the country’s monthly trade surplus at $65.81bn, down 16.1 per cent and below forecasts.
Some economists said the better than expected import figure indicated that the post-Covid recovery in China’s domestic economy remained on track despite the slowing of the powerful export sector. Imports had declined 7.9 per cent year on year in April, while exports had climbed 8.5 per cent, falling back from an unexpected jump in March.
Julian Evans-Pritchard, head of China economics at Capital Economics, wrote in a research note that, accounting for a lower base of comparison from last year and changes in import prices, May import volumes actually increased 8.5 per cent in seasonally adjusted month-on-month terms, the fastest pace in more than a year.
“Import volumes rose to their highest in 18 months, supporting our view that the reopening recovery remains on track,” said Evans-Pritchard.
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Trade provided a lifeline for China’s economy during the pandemic, but has dragged in recent months as global demand for the country’s exports has declined. The manufacturing sector has underperformed services since Covid controls were unwound last year.
A series of economic indicators in recent weeks has pointed to an uneven economic recovery that, while still in train, is starting to slow, with falling industrial production and profits, factory activity and credit growth.
While services activity has picked up this year, there are also signs that it is beginning to lose some of its early rapid gains since the stringent Covid curbs were lifted.
China’s customs administration said trade with the US fell 5.5 per cent during the first five months of the year compared with a year earlier, with its trade surplus with the world’s largest economy dropping 14.5 per cent. Trade with Japan declined 3.5 per cent year on year.
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China’s biggest trade partner during the first five months of the year was the Association of Southeast Asian Nations, with which total trade increased by 9.9 per cent, followed by the EU, with which trade increased 3.6 per cent.
Evans-Pritchard projected China’s exports would fall further as the impact of sharp interest rate increases filtered through in developed economies later this year.
“As for imports, we think they will continue to recover over the coming quarters as the boost from reopening continues to feed through,” he wrote.
Source: Economy - ft.com
