China May trade data highlights growth concerns
China on Saturday reported a sharp slowdown in exports in May compared to the previous month while imports unexpectedly dropped, as the world’s second largest economy grapples with slowing growth and sluggish overseas demand.
Overseas shipments rose just one per cent to US$182.8 billion last month, far lower than 14.7 per cent recorded in April, customs authorities said in a statement.
It also missed a medium forecast of 5.6 per cent expansion in a Dow Jones Newswires’ poll of economists.
Imports dropped 0.3 per cent to US$162.3 billion, said the statement, down from a rise of 16.8 per cent in April and well below the economists’ median forecast of a five per cent increase.
Trade surplus stood at US $20.4 billion last month, it said, widening marginally from the previous month.
The disappointing performance was due to “a slowdown in the domestic economy, sluggish foreign demand, companies’ high costs, the appreciation in the yuan’s real value and a worsening trade environment”, customs said.
The world’s second-largest economy registered 7.8 per cent growth last year, its slowest rate in 13 years.
The government in April announced a surprisingly weak expansion rate of 7.7 per cent for the first quarter, dashing hopes that growth was poised to accelerate this year after showing strength at the end of last year.
More recent economic indicators also failed to improve the outlook, with manufacturing activities in the country coming in at a contracting eight-month low of 49.2, according to a survey by HSBC this week. A figure below 50 indicates a contraction.
“Growth in exports to all major developed economies slowed... suggesting a recovery in the global economy is yet to be strong,” said Tang Jianwei, a Shanghai-based economist with the Bank of Communications.
“Domestic demand has continued to be slack, affecting imports of commodities and raw materials.”
He also noted that rising trade disputes between China and major trade partners have had “rather big negative impact” on the country’s imports and exports.
On Tuesday the European Commission imposed anti-dumping duties on imports of Chinese solar panels. Beijing responded immediately with an announcement of an anti-dumping probe into European wine, widening a row that has already involved telecom equipments, chemicals and seamless pipes.
The world’s top exporter is also embroiled in trade disputes concerning other products with countries including the United States and Japan.
But Tang said the monthly change in trade data is unlikely to prompt the government to take any immediate measures.
“The Chinese leadership is much more tolerant of slower economic growth than in the past. They want to focus on reforms,” he said.
Chinese leaders have said expansion will slow in the next stage of the nation’s development from the near-double-digit yearly rises of recent decades, as they try to retool the economy to emphasise consumer demand as the key growth driver, rather than investment and exports.
The government has set its economic growth target for this year at 7.5 per cent.