Chinese exports dropped by 7% this May, far more than what was anticipated by a Reuters poll. According to recently released customs data, Chinese exports to the United States dropped by 15.1% in May compared to the same time last year. Similarly, China’s exports to the European Union decreased by 4.9%.
Longer Term Trend Is Down
In April, China’s exports did better than expected, growing by 8.5% compared to the previous year. However, the recent export numbers for May were disappointing, suggesting a downward trend in the long run, according to Hao Hong, the chief economist at Grow Investment Group. Hong further said that China will not be able to depend too much on trade for the next 6 months, as interest rates and inflation remain high in the largest Chinese export base, the US.
Falling Global Demand
Economic analysts believe that the reason for the decline in exports is because there is not much demand for Chinese goods. The weak import performance, as China relies on importing parts and materials from other countries to make finished products for export.
