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China’s exports fell 7.5 percent in May, slowing its economic recovery

China’s exports fell 7.5 percent in May, slowing its economic recovery

An employee greets visitors at a kiln shop at the China Import and Export Fair, also known as the Canton Fair, in Guangzhou, Guangdong Province, China, April 16, 2023. REUTERS/Ellen Zhang/File

Chinese exports fell in May for the first time in three monthsexacerbating risks in the world’s second largest economy given weak global demand.

Contracted shipments abroad a 7.5% Compared to the previous year, even $284,000 millionOn Wednesday, official data showed it was worse than the median forecast for a 1.8% decline. Exports contracted to most destinations, with double-digit declines to places like USA, Japan, Southeast Asia, France and Italy.

Imports decreased 4.5%, amounting to $218 billionbetter than expectations for a decline of 8%, leaving a trade surplus of $66,000 million. Chinese purchases fell to most regions in May, with imports from Taiwan and South Korea contracting more than 20%, indicating weak global demand for electronics.

One of the bright spots in the economy was the expansion of exports earlier this year, which helped support a recovery after China dropped its pandemic rules. However, the latest data shows that the recovery has weakened, with manufacturing activity contracting in May and home sales growth slowing after a rebound earlier in the year.

The trade report isOther disappointing data will raise concerns about growth Expectations for more political support will intensify.” Khun GohStrategist at Australia & New Zealand Banking Group.

An aerial photo shows cars for export at a port in Yantai, Shandong Province, China May 3, 2023. China Daily via Reuters/File

The decline in Chinese exports and imports in May is further evidence that weak demand, both domestic and external, is paralyzing the recovery. Once you remove the statistical weirdness that led to the April numbers, these numbers give us a clearer picture of a challenging reality.

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The decline in exports shows how the slowdown in the global economy is beginning to affect China. Data on Wednesday showed that the value of exports declined from the month of April, marking the second consecutive decline on a monthly basis. economists surveyed bloomberg They expect it Chinese exports contract throughout the year.

There is growing speculation that Beijing may have to enforce more catalysts to drive growth. Some economists expect the central bank to lower reserve requirement ratios for banks in the coming months, while others say a rate cut may be necessary, perhaps as early as next week.

People collect packages from a delivery courier outside an office building in Beijing, Tuesday, May 16, 2023 (AP/Mark Schiefelbein/File)

The bright spot for Chinese exporters was continued strong global demand for Chinese cars, with total vehicle shipments reaching a monthly record of $9 billion. One of the drivers of the recent surge in auto exports has been the popularity of Chinese electric cars abroad, though shipments of other types of cars have also increased.

The benchmark CSI 300 index closed lower on Wednesday 0.5%less than their Asian counterparts. double yuan a 0.1%standing at 7.1367 per dollar at 16:37 local time.

The system has set a relatively conservative growth target around 5% for the year, which most economists expect to reach even with the recent drop in activity. Consumer spending on travel and restaurants has so far led to a recovery in the economy, while industrial activity has slowed.

(with information from Bloomberg)

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