China’s exports shrank much faster than expected in May and imports fell, albeit at a slower pace, as manufacturers struggled to find demand abroad and domestic consumption remained sluggish.
Exports from the world’s second-largest economy fell 7.5 percent year-on-year in May, the biggest decline since January and swinging from 8.5 percent growth in April. Imports contracted at a slower pace, dropping 4.5 percent, a slower pace of decline 7.9 percent than the previous month.
The figures compared with a Reuters poll that showed economists forecast a much smaller 0.4 percent decline in exports and an 8.0 percent fall in imports.
The poor export performance reflects weak demand for Chinese goods as does the weak import performance as China brings in parts and materials from abroad to assemble finished products for export.
South Korean data last week showed shipments to China slid 20.8 percent in May, marking a full year of monthly declines, with Korean semiconductor exports dropping 36.2 percent, suggesting weak demand for components for final manufacture.
China’s factory activity shrank faster than expected in May on weakening demand, the official purchasing managers’ Index (PMI) showed last week.
The PMI subindexes showed factory output swung to contraction from expansion while new orders, including new exports, fell for a second month.
Having beaten expectations in the first quarter, analysts are now downgrading their expectations for the economy for the rest of the year, as factory output continues to slow amid persistently weak global demand.
The government has set a modest GDP growth target of around 5 percent for this year, after badly missing the 2022 goal.
