By Joe Cash
BEIJING (Reuters) – China’s imports are expected to have contracted in May, despite a low base last year as a lockdown in Shanghai brought the country’s biggest port to a standstill, while exports likely fell for the first time in three months, a Reuters poll showed.
Inbound shipments to the world’s second-largest economy were projected to have fallen 8.0% year-on-year, following a drop of 7.9% in April, according to the median forecast of 26 economists in the poll finalised on Monday.
Exports are expected to have shrank 0.4% from a year earlier against growth of 8.5% in April, reflecting weak global demand for Chinese goods and aligning with poor import performance since China brings in parts and materials from abroad to assemble into finished products for export.
China’s trade data will be released on Wednesday.
The pessimistic outlook for exports suggests that Chinese exporters have caught up on unfulfilled orders after last year’s COVID-19 disruptions and global demand is insufficient to sustain a recovery in outbound shipments.
China’s factory activity shrank faster than expected in May on weakening demand, the official manufacturing purchasing managers’ index (PMI) showed last Wednesday, but a private sector survey released on Thursday unexpectedly swung to growth.
The official PMI sub indexes for May showed factory output swung to contraction from expansion while new orders, including new exports, fell for a second month.
South Korean shipments to China, a leading indicator of China’s imports, slid 20.8% in May, marking the 12th straight annual loss, but the pace eased to the slowest seen in seven months.
China’s economy grew faster than expected in the first quarter due to robust services consumption, but factory output has continued to lag amid persistent weak global growth.
Analysts are now downgrading their expectations for the economy with Nomura and Barclays both cutting China’s 2023 GDP growth forecasts
The government has set a modest GDP growth target of around 5% for this year, after badly missing the 2022 goal.
(Polling by Devayani Sathyan and Sujith Pai; Reporting by Joe Cash; Editing by Jacqueline Wong)
