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Update: China May exports fall less than expected, but imports tumble
[BEIJING] China's exports in May fell less than expected but a double-digit drop in imports will likely keep the pressure on Beijing for more stimulus to avert a sharper economic slowdown.
China's exporters have been struggling to cope with weak overseas demand, rising labour and currency costs, exacerbating downward pressure on the world's second-largest economy.
Exports in May fell 2.5 per cent from a year earlier and imports slid 17.6 per cent, data released by the General Administration of Customs on Monday showed.
That left the country with a near record trade surplus of US$59.49 billion for the month.
Analysts polled by Reuters had expected exports to fell 5.0 per cent in May from a year ago, following a surprising 6.4 per cent fall in April, and predicted imports would fall 10.7 per cent, versus a 16.2 per cent slide in April. "A slightly improved export figure does not mean the condition is substantially better. Chinese companies still lack bargaining power in global markets due to the relative strength of the Chinese currency," Liu Yaxin, macro strategist at China Merchants Securities in Shenzhen. "Overall, the data shows the Chinese economy is still in the process of seeking a bottom. We expect trade conditions to continue to be sluggish in the following 4-5 months, with more government policy rolling out to stabilise (the economy)." The yuan has gained against major non-dollar currencies in recent months, leading to its rise on a trade-weight basis, but Premier Li Keqiang has ruled out a devaluation.
China's trade grew 3.4 per cent in 2014, missing the government's growth target of 7.5 per cent by more than half. The government has lowered its growth target for 2015, with combined imports and exports expected to rise around 6 per cent.
The government is due to release inflation data on Tuesday and industrial output, investment and retail sales numbers on Thursday.
Economists polled by Reuters expected some signs of steadying in the economy thanks to stimulus measures, but analysts say more support is needed to counter headwinds from a property downturn and patchy exports.
China cut interest rates for the third time in six months in May - on top of two reductions in the amount of money banks must keep in reserve - in a bid to lower borrowing costs and stoke a sputtering economy that is headed for its worst year in a quarter of a century.
Many analysts have already penciled in sub-7 per cent growth for the second quarter, raising the risk that the government will not meet its full-year growth target of around 7 per cent.