EXPORT growth continued to slow in May while imports rose for the first time in 19 months, pointing to a pick-up in domestic demand but a not-yet-firm overall recovery.
Exports in yuan-denominated terms rose 1.2 percent year on year to 1.17 trillion yuan (US$181 billion), slower than April’s 4.1 percent rise, according to figures released by the General Administration of Customs.
Imports surprised the market by growing 5.1 percent year on year to 847.1 billion yuan, reversing April’s 5.7 percent decline and ending an 18-month losing streak. That led to a 7.7 percent narrowing of the trade surplus to 324.8 billion yuan.
“May’s exports indicate that global demand remains lackluster while import data suggests domestic demand has improved,” Australia & New Zealand Banking Group said. “We need to wait for a firmer recovery in the US and Europe so that China’s export growth can sustain positive growth. For imports, we do not expect a strong rebound in the near term as domestic demand will likely edge down on a tighter credit environment.”
The bank said faster depreciation of the yuan in May nudged headline growth rates in yuan terms compared with those in dollar terms, and it did not expect China’s monetary authorities to guide the yuan significantly lower to boost the economy.
“The government does not favor competitive devaluation,” it said, “but rather wants to boost China’s competitiveness through innovation and technological upgrades.”
Li Jing, an HSBC economist, said May’s figures pointed to some signs of stabilization, but recovery was not yet on a firm footing. “The detailed breakdown suggests that demand for major commodities improved substantially in volume terms, likely the result of accelerating infrastructure investment. However, the external demand outlook continues to pose key downside risks to growth.”
Exports to the European Union, China’s largest trading partner, rose 2 percent year on year in the first five months, while exports to the US and the Association for Southeast Asian Nations, the second and third-largest, shed 5.2 percent and 1.6 percent respectively, official figures showed.
The latest data echoed earlier indicators revealing uncertainties in economic outlook.
The official purchasing managers’ index, which reflects conditions in largely state-owned manufacturers, ended at 50.1 in May, while the Caixin China PMI, slanted toward private and export-oriented companies, dipped to 49.2 from 49.4 in April.
The People’s Bank of China yesterday cut its annual forecast for exports from a 4.1 percent increase to a 1 percent decline for 2016 while maintaining its GDP growth forecast at 6.8 percent.