China's Exports Fall, Imports Slump In May

Mainland exports contracted in May as global coronavirus lockdowns continued to devastate demand, while a sharper-than-expected fall in imports pointed to mounting pressure on the country's manufacturers as global growth stalls.

The sombre trade readings for the world's second-biggest economy could pile pressure on policymakers to roll out more support for a sector that is critical to the livelihoods of more than 180 million workers. Total trade accounts for about a third of the economy.

Overseas shipments in May fell 3.3 per cent from a year earlier, after a surprising 3.5 per cent gain in April, customs data showed on Sunday. That compared with a 7 per cent drop forecast in a Reuters poll.

While exports fared slightly better than expected, imports tumbled 16.7 per cent compared with a year earlier, worsening from a 14.2 per cent decline the previous month and marking the sharpest decline since January 2016.

It had been expected to fall 9.7 per cent in May.

As a result, China posted a record trade surplus of US$62.93 billion last month, the highest since records began in 1981, compared with the poll's forecast for a US$39 billion surplus and US$45.34 billion surplus in April.

China's trade surplus with the United States widened to US$27.89 billion in May, calculation based on customs data showed.

This comes as Sino-US tensions are again on the rise, though sources say US President Donald Trump has little choice but to stick with a Phase 1 trade deal for now.

Both official and private factory surveys for May showed sub-indexes for export orders remained deep in contraction. Profits at mainland industrial firms fell almost 30 per cent in the January-April period.

Many mainland exporters, stuck with unsold stock and cancelled orders from abroad, are cutting staff and moving into e-commerce to target the domestic market. (Reuters)