China's Exports Decline By 7.5 Per Cent In May, Sees Decline For The First Time Since February

In April, China’s exports beat expectations slightly with 8.5 per cent YoY growth

World’s second-largest economy, China, has witnessed a decline in exports for the first time since February, adding to concerns that growth in the world’s second-largest economy could be faltering. The country’s exports plunged 7.5 per cent year-on-year (YoY) to $283.5 billion, customs data showed Wednesday, far worse than the 0.4per cent decline predicted by a Reuters poll.

According to news reports, the decline was so sharp that export volumes came in below their levels at the start of the year, after accounting for seasonality and changes in export prices, Julian Evans-Pritchard, head of China Economics at Capital Economics, said in a note. "This points to subdued global demand for Chinese goods," he said.

In April, China's exports beat expectations slightly with 8.5 per cent YoY growth. However, the disappointing export figures for May indicate that the longer-term trend is down, said Hao Hong, chief economist at Grow Investment Group. China won’t be able depend on trade to boost its economy for "another six months, for sure," he said, noting a drag from lackluster US demand, where inflation, and interest rates, remain high.

Customs data released on Wednesday showed the dollar value of China exports to the US slumped 15.1 per cent in May from a year earlier, while exports to the European Union declined 4.9 per cent. China exports to ASEAN, however, rose 8.1 per cent in dollar terms in May from a year earlier.

Imports for May dropped by 4.5 per cent from a year ago to $217.69 billion, less than the 8 per cent plunge forecast by Reuters. China’s monthly imports have declined on a year-on-year basis since late last year. Other analysis of the data showed signs of recovery in domestic demand.

Capital Economics’ Evans-Pritchard estimated that import volumes for May reached an 18-month high, after accounting for a lower comparison base and price changes. He expects imports “will continue to recover over the coming quarters as the boost from reopening continues to feed through.” China is set to release inflation data on Friday.