Unexpectedly, China’s exports fell in May, the first time since February, sparking worries about a possible downturn in the second-largest economy in the world. Exports decreased by 7.5% year over year to $283.5 billion, substantially more than the 0.4% loss projected by a Reuters poll, according to customs data published on Wednesday.

Even after taking into account seasonality and variations in export prices, the rapid decrease in exports was so significant that the amount of exports fell below the levels recorded at the beginning of the year, as emphasized by Julian Evans-Pritchard, head of China Economics at Capital Economics. This suggests a moderating demand for Chinese products globally, indicating a possible drag on economic development.

The fall in China's exports has now caught up with the fall in China's imports | Council on Foreign Relations
With an increase of 8.5% year over year, China’s export performance in April marginally above forecasts. Hao Hong, the senior economist of Grow Investment Group, believes that the dismal May numbers indicate to a longer-term declining trend. For at least another six months, according to Hong, China’s economy cannot be supported by trade, and he attributes this to weak demand from the United States, where high inflation and interest rates are still in effect.

The dollar amount of China’s exports to the United States in May decreased by 15.1% when compared to the same month last year, according to the customs figures issued on Wednesday. Additionally, there was a 4.9% decrease in shipments to the European Union. In comparison, over the same time period, exports to the Association of Southeast Asian Nations (ASEAN) increased by 8.1% in dollar terms.

In terms of imports, May saw a decline of 4.5% from a year earlier, totaling $217.69 billion, which was less than the 8% decline predicted by Reuters. Since late last year, China has seen monthly imports fall year over year. When taking into account a smaller comparison base and price adjustments, import volumes in May hit an 18-month high, as highlighted by Evans-Pritchard, suggesting that there are signs of a revival in domestic demand. As the effects of the economy’s reopening continue to be good, he anticipates that imports will continue to improve in the next quarters.

China exports to US jump, contrary to press reports - Asia TimesThe situation in China’s economy remains a focus for watchers with the publication of inflation statistics set for Friday, as the unexpected drop in exports adds to the problems and uncertainties the nation already faces.


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