China’s exports fall in May as central bank researchers release gloomy revised forecast for the sector
People’s Bank of China research bureau says exports now likely to fall this year rather than rise because of uncertainties over global economic growth
China’s exports fell more than expected in May, suggesting weak demand overseas for Chinese goods and services as the government attempts to boost the nation’s slowing economy.
The figures came as researchers at China’s central bank revised downwards their prediction for the level of Chinese exports this year due to weakening global economic growth.
Import figures, however, improved last month, beating market predictions, according to data released by China’s General Administration of Customs on Wednesday.
The figures suggest demand for overseas goods in China is showing signs of improvement, but overall the picture is weak, said China Merchants Securities in a research note.
Exports fell 4.1 per cent last month in dollar terms from the same period a year ago, customs data showed. This compared with a drop of 1.8 per cent in April. Economists polled by Reuters had expected May exports to fall 3.6 per cent,
Imports fell 0.4 per cent in May, a sharp improvement on the drop of 10.9 per cent the previous month.
The research bureau of the People’s Bank of China downgraded its trade forecasts for 2016 in a working paper released on Wednesday.
It said exports were expected to fall one per cent this year, compared with its previous forecast of a rise of 3.1 per cent.
“The weakening momentum of global growth is the main reason for the downward revision of exports,” it said.
Imports were expected to fall 3.2 per cent this year from the previous estimate of a rise of 2.3 per cent, the paper said.
Meanwhile, the researchers revised up forecasts of inflation and investment, but left their GDP estimate unchanged at 6.8 per cent this year.
China’s trade surplus in May stood at US$49.98 billion, the customs authority said, against April’s figure of US$45.6 billion.
Besides a fragile recovery in the United States, the purchasing managers’ index in France has remained in contraction since earlier this year, while the pace of manufacturing in Japan has decelerated.
These factors add to evidence that China is still facing lacklustre external demand, according to economists.
“We need to wait for a firmer recovery in the US and Europe so that China’s export growth can sustain positive growth,” said ANZ economists Raymond Yeung and Louis Lam in a research note.
“For imports, even though we do not expect a strong rebound in the near term as domestic demand will likely edge down on a tighter credit environment, China will likely see a sizable trade surplus in the next few months,” they said.
The World Bank and the International Monetary Fund have downgraded their forecasts for global growth, citing financial market turmoil, slow economic growth in developed countries, difficulties in emerging markets and geopolitical threats.
For the first five months, exports fell 7.3 per cent and imports fell 10.3 per cent, the customs authority said.
A leading export indicator fell in May, suggesting exports would face big downward pressure in the third quarter, the customs authority said. New export orders and confidence in the market both fell, it added.
Premier Li Keqiang said on Tuesday China was not intending to launch “currency war” or “trade war” to lift exports.
China’s imports from Hong Kong surged nearly 250 per cent last month from the previous year, up from a rise of 200 per cent in April, said Steven Zhang, an economist at Morgan Stanley Huaxin Securities. “It may indicate rising capital outflow via false trade activities last month when the Chinese yuan faced fresh depreciation pressure amid rising speculation of a rate hike by the Federal Reserve,” he said.