China’s exports fell 7.5% in May, much more than expected

BEIJING – Customs data on Wednesday showed that China’s exports fell in May for the first time since February.

Exports fell 7.5 percent year-on-year to $283.5 billion, much worse than the 0.4 percent decline expected in a Reuters poll.

The decline was so sharp that export volumes came in below levels at the start of the year, after accounting for seasonality and changes in export prices, Julian Evans-Pritchard, head of China economics at Capital Economics, said in a note.

“This indicates a decline in global demand for Chinese goods,” he said.

In April, China’s exports slightly exceeded expectations with a growth of 8.5% year-on-year.

However, the disappointing export figures for May suggest the long-term trend is downward, said Hao Hong, chief economist at Grow Investment Group.

He said China will not be able to count on trade to boost its economy “for another six months for sure,” pointing to waning fading US demand, as inflation — and interest rates — remain high.

Imports for May fell 4.5% from a year ago to $217.69 billion – less than the 8% drop forecast by Reuters.

China’s monthly imports have declined year on year since late last year.

Other analyzes of the data showed signs of recovery in domestic demand.

Evans-Pritchard of Capital Economics estimated that import volumes for May reached an 18-month high, after accounting for a lower comparison base and price changes.

He predicts that imports “will continue to recover over the coming quarters as the boost from reopening continues to grow.”

A breakdown of China’s May trade by country or category in US dollars was not immediately available.

China is preparing to publish inflation data on Friday.

— CNBC’s Jihye Lee contributed to this report.