China’s exports plunge by 7.5% in May, far more than expected

A cargo ship carrying containers is seen near the Yantian port in Shenzhen, following the novel coronavirus disease (COVID-19) outbreak, Guangdong province, China May 17, 2020.
Martin Pollard | Reuters

BEIJING — China’s exports fell in May for the first time since February, adding to concerns that growth in the world’s second-largest economy could be faltering.

Exports fell 7.5% year-on-year to $283.5 billion, customs data showed Wednesday, far worse than the 0.4% decline predicted by a Reuters poll.

The decline was so sharp that export volumes came in below their 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 points to subdued global demand for Chinese goods,” he said.

In April, China’s exports beat expectations slightly with 8.5% year-on-year growth. However, the disappointing export figures for May indicate that the longer-term trend is down, said Hao Hong, chief economist at Grow Investment Group.

China won’t be able depend on trade to boost its economy for “another six months, for sure,” he said, noting a drag from lackluster U.S. demand, where inflation — and interest rates — remain high.

Customs data released Wednesday showed the dollar value of China exports to the U.S. slumped 15.1% in May from a year earlier, while exports to the European Union declined 4.9%. China exports to ASEAN, however, rose 8.1% in dollar terms in May from a year earlier.

Imports stabilize

Imports for May dropped by 4.5% from a year ago to $217.69 billion — less than the 8% plunge forecast by Reuters. China’s monthly imports have declined on a year-on-year basis since late last year.

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

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

He expects imports “will continue to recover over the coming quarters as the boost from reopening continues to feed through.”

China is set to release inflation data on Friday.

— CNBC’s Jihye Lee contributed to this report.

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