Exports fall for 3rd consecutive month and import slide for 7th consecutive month, highlighting slowing demand in the country.
A bigger-than-expected slide in China’s imports in May strengthened expectations that more policy stimulus may be needed to avert a sharp slowdown in the world’s second-largest economy.
Exports in May fell 2.5 percent from a year ago, data from the General Administration of Customs showed on 8 June smaller than a 5 percent fall forecast by economists,while imports tumbled 17.6 percent versus an expected 10.7 percent drop.
Overall, its dynamic is under market expectations and confirms that China’s economy is slowing down. Trade may be sluggish in the following 4-5 months. China government and central bank may launch extra measures to improve the drop such as the fourth interest rates cut in 2015.
Exports fell 2.5% from a year ago in dollar denominated terms, and 2.8% in yuan denominated figures.Both figures were above expectations, but the slide in imports has sparked worries on the domestic end. Imports tumbled 17.6% in dollar terms, while yuan-denominated imports plunged 18.1% – falling for the seventh month.
Zhu Haibin, economist at JP Morgan said Monday’s data shows that the economy will struggle to meet the government’s trade growth target even with the export rise.
“Imports are still much weaker than expected. Exports are doing fine, even though we are still talking about a year-on-year decline, but in terms of momentum they’ve rebounded a bit after the collapse in March,” he told Reuters.
“This year the government set up the target of trade growth at 6%, which at this moment, is still impossible to achieve, particularly with the weak imports.”
Domestic demand in China continues to be weak despite stimulus measures by the government and central bank to boost growth.
The central bank had lowered interest rates just last month, which was the third time in six months to spur lending and economic activity.