(Bloomberg) — Chinese exports fell for the first time in three months in May, adding to risks in the world’s second-largest economy as global demand weakens.
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Overseas shipments shrank 7.5% from a year ago to $284 billion, official data showed Wednesday, worse than the median forecast for a 1.8% drop. Imports declined 4.5% to $218 billion, better than an expected drop of 8%, leaving a trade surplus of $66 billion.
The expansion in exports early this year was one bright spot for the economy, helping to underpin the recovery after China dropped its pandemic rules. Recent data shows the recovery has weakened, though, with manufacturing activity contracting in May and home sales growth slowing after a pickup earlier in the year.
While the trade figures last month may have been impacted by the base of comparison from a year ago, the data also reflects weaker global demand. Economists expect China’s exports to contract this year.
The benchmark CSI 300 Index fell 0.4% as of the midday break, while the Shanghai Composite Index almost erased a gain of as much as 0.5%. The offshore yuan was little changed at 7.1286 per dollar.
Speculation is growing that Beijing may have to deliver more stimulus to bolster growth. Some economists expect the central bank to cut the reserve requirement ratio for banks in coming months, while others argue an interest rate cut may be necessary, possibly as early as next week.
The trade report is “yet another disappointing data which will raise growth concerns and intensify expectations of more policy support,” said Khoon Goh, a strategist at Australia & New Zealand Banking Group.
The government set a relatively conservative growth target of around 5% for the year, which most economists expect will be achieved even with the recent slump in activity. Consumer spending on travel and restaurants has so far fueled the economy’s recovery, while industrial activity has lagged.
The customs department didn’t provide a breakdown of the trade data as of 11:30 a.m. in Beijing.
–With assistance from Xiao Zibang.
(Updates with new chart and more details throughout)
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