China exports weaken, signaling more headwinds for growth

Container trucks at a port in Qingdao.
Container trucks at a port in Qingdao.PHOTO: AFP

BEIJING (BLOOMBERG, REUTERS) - China's exports weakened in May, signaling external demand still isn't giving a sustained boost to growth in the world's biggest trading nation.

Overseas shipments fell 4.1 per cent in dollar terms from a year earlier, the customs administration said on Wednesday (June 8). Imports slipped 0.4 per cent to leave a trade surplus of US$50 billion.

Global demand has been softening while the yuan has weakened against a trade-weighted basket of currencies this year, potentially complicating the government's plan to cut excess industrial capacity without derailing the economic expansion. The World Bank on Tuesday cut its global growth estimate to 2.4 per cent for this year, which would be the same as 2015, from the 2.9 per cent projected in January.

Imports dropped 0.4 per cent from a year earlier, the smallest decline since they turned negative in November 2014, likely reflecting higher commodities prices but also suggesting that domestic demand has picked up as Beijing increases spending on big infrastructure projects to support growth.

That resulted in a trade surplus of US$49.98 billion in May, versus forecasts of US$58 billion and April's US$45.6 billion.

Economists polled by Reuters had expected May exports to fall 3.6 per cent, after a 1.8 per cent decline in April, and expected imports to fall 6 per cent, following April's 10.9 per cent decline.

China's official manufacturing activity survey last week showed signs of steadying in May but remained weak amid soft demand at home and abroad, with new orders expanding more slowly and growth in export orders stalling.

The trade data is the first to be released by China for May.

March indicators were upbeat, sparking hopes that the economy was perking up, but April was less rosy, raising concerns that the spring bounce may be short-lived.