China’s exports fell last month for the first time since February, data showed yesterday, breaking a two-month growth streak as a post-COVID-19 rebound faded and adding to speculation that officials would unveil fresh stimulus measures.
Rising global inflation, the threat of recession elsewhere and geopolitical tensions with the US have weakened demand for Chinese products.
That resulted in overseas shipments sinking 7.5 percent year-on-year last month, Customs figures showed, marking a sharp drop from an increase of 8.5 percent in April and much steeper than the 1.8 percent forecast in a Bloomberg survey.
Photo: AFP
However, exports to Russia rose 75.6 percent last month, the highest rate since Moscow invaded Ukraine, even as trade with most major European markets and the US fell.
Meanwhile, imports fell 4.5 percent last month, a smaller decline than April’s 7.9 percent contraction, but better than the 8 percent estimate.
The data are the latest to highlight weaknesses in the world’s No. 2 economy, with manufacturing activity shrinking last month for the second successive month.
The figures were “yet another disappointing data which will raise growth concerns and intensify expectations of more policy support,” Australia and New Zealand Banking Group Ltd head of Asia research Khoon Goh (吳昆) said.
The property sector, which along with construction accounts for about one-quarter of China’s GDP, experienced its “worst-ever slump” last year, Beijing-based economic consultancy Gavekal-Dragonomics (龍洲經訊) said.
To revive a struggling industry, the government has pivoted away from its crackdown on debt toward a more conciliatory approach since November last year, with targeted support measures for the most financially sound developers.
Reports yesterday said that authorities have asked the country’s biggest banks to lower their deposit rates in a bid to boost the economy.
Analysts said that such a move could indicate that the People’s Bank of China was considering an interest rate cut as soon as this month.
Nomura Holdings Inc chief China economist Ting Lu (陸挺) said in a note this week that analysts expected “more easing and stimulus measures.”
“Amid the deteriorating property sector, its potentially devastating impact on government finance and the rising risk of double-dip, we do not expect Beijing to sit idle,” Lu wrote.
Last month’s trade data suggests “subdued global demand for Chinese goods and supports our view that the robust export figures of the previous couple of months reflected distortions to the customs data rather than a turnaround in foreign demand,” Capital Economics Ltd analysts wrote in a note yesterday.
“We think exports will fall further before bottoming out later this year,” they said.
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