ALBAWABA – China exports and imports plummeted in May amid sluggish global demand, especially from developed markets, Bloomberg reported Thursday.
Exports slumped 7.5 percent year-on-year in May, data from China's Customs Bureau showed on Wednesday, while imports contracted 4.5 percent.
The decline in China exports exceeded expectations of 0.4 percent, by far, according to Bloomberg.
However, the slowdown in China’s imports fell just shy of the expected 8 percent decline and of April’s 7.9 percent fall.
The Chinese economy grew faster than expected in the first quarter of 2023, driven by robust services consumption and a backlog of orders following years of COVID disruptions. But factory output slowed as rising interest rates and inflation weigh on demand in the United States (US) and Europe.
Earlier in May, official Chinese data reports came out marking the first time in history that Chinese trade transactions in the Chinese currency, Yuan, surpassed in value of transaction in the US dollar.
"Weak exports confirm that China needs to rely on domestic demand as the global economy slows," Zhiwei Zhang, chief economist at Pinpoint Asset Management, told Bloomberg.
"There is more pressure for the government to boost domestic consumption in the rest of the year, as global demand will likely weaken further in the second half," he added.
Highlighting the extent of the weakness, the data shows trade was worse even than when the port of Shanghai, China's busiest, was shut down due to strict COVID curbs a year earlier.
Asian stocks fell into the red, as reported by Bloomberg, as did the yuan and the Australian dollar, a commodity currency that is highly sensitive to changes in Chinese demand.
China’s economy is facing a doubly difficult challenge with faltering demand domestically and overseas.
South Korean data showed exports to China slipped 20.8 percent in May, marking a full year of consecutive monthly declines. Korean semiconductor exports also dropped 36.2 percent, indicating weak demand for components for final manufacturing.
Meanwhile, Chinese imports of semiconductors fell 15.3 percent, Bloomberg confirmed.
Accordingly, China’s official purchasing managers' index (PMI), released last week, showed factory activity shrank faster than expected in May.
