China’s exports fell 7.5% in Could, way more than anticipated

A cargo ship carrying containers is seen near Yantian port in Shenzhen after the outbreak of the novel coronavirus disease (COVID-19), China’s Guangdong province, 17 May 2020.

Martin Pollard | Reuters

BEIJING — China’s exports fell in May for the first time since February, fueling fears that growth in the world’s second-biggest economy could be faltering.

Customs data on Wednesday showed exports fell 7.5% year on year to $283.5 billion, far worse than the 0.4% drop predicted in a Reuters poll.

The decline was so severe that export volumes were below their levels at the start of the year, adjusting for seasonality and changes in export prices, said Julian Evans-Pritchard, head of China economics at Capital Economics, in a note.

“This indicates subdued global demand for Chinese goods,” he said.

In April, China’s exports slightly exceeded expectations, growing 8.5% yoy. However, disappointing May export figures suggest the longer-term trend is downward, said Hao Hong, chief economist at Grow Investment Group.

China “certainly won’t be able to rely on trade to boost its economy for another six months,” he said, citing a drag from weak US demand, where inflation — and interest rates — remain high.

Customs data released on Wednesday showed that the dollar value of Chinese exports to the US fell 15.1% yoy in May in May, while exports to the European Union fell 4.9%. However, Chinese exports to ASEAN in May rose 8.1% yoy in dollar terms.

Imports stabilize

Imports fell 4.5% year over year to $217.69 billion in May — less than the 8% plunge Reuters had forecast. China’s monthly imports have declined year-on-year since late last year.

Another analysis of the data showed signs of a recovery in domestic demand.

Capital Economics’ Evans-Pritchard estimated that import volumes hit an 18-month high in May, allowing for a lower basis of comparison and price changes.

He expects imports “to continue to recover over the coming quarters as the reopening recovery continues to be felt.”

China is expected to release inflation data on Friday.

– CNBC’s Jihye Lee contributed to this report.

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