BEIJING (Reuters) – Chinese exports fell 7.5% from a year earlier in May, the biggest drop since January, China Customs said on Thursday. The 0.4% drop was more than expected by economists polled by Reuters, and was down from 8.5% in April.
Imports decreased by 4.5% from the previous year. Economists had expected an 8.0% decline. The pace of decline slowed from April’s 7.9% decline.
Analysts have cut their outlook for China’s economy for the rest of the year as manufacturing output slows amid continued weakness in domestic and foreign demand.
May’s yuan-denominated trade data showed exports down 0.8% year-on-year and imports up 2.3%.
“Weak exports underscore China’s need to rely on domestic demand as the global economy slows,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. “With global demand likely to weaken further in the second half of the year, there will be more pressure on the government to encourage domestic consumption later this year,” he predicted.
The slump in exports and imports reflects weak demand for Chinese products at home and abroad, especially in developed countries.
The trade surplus with the United States in May was $28.16 billion, according to a Reuters estimate based on official figures. That’s down from $29.68 billion in April.
South Korea’s May exports to China fell 20.8% year-on-year, marking the 12th straight month of decline.
On the other hand, China’s semiconductor imports decreased by 15.3%. This is due to sluggish exports of consumer electronics that require semiconductors.
Demand for raw materials was also generally weak, with imports of coal and copper declining.
“Exports are expected to decline further before bottoming out later in the year,” said Julian Evans-Pritchard, head of China at Capital Economics. The impact of the 2020 recession will be felt later this year, slowing economic activity and pushing many countries into a mild recession.”
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