On Wednesday, customs data showed that China’s exports fell 7.5% and imports fell 4.5% in May compared to the previous year. This indicates that the country’s economic recovery has slowed down as virus restrictions lifted and pressure from rising interest rates weakened global demand. In April, exports had unexpectedly increased by 8.5%, but this progress has now reversed with export numbers dropping to $283.5 billion. Import figures also declined to $217.7 billion, which is slower than the 7.9% contraction that was observed in the previous month.
These weak trade numbers are a sign that China’s recovery is slowing down after the lifting of anti-virus restrictions that had shut down industrial cities for weeks and banned most international travel in December. Retail consumers are spending less than expected due to worries about the economic outlook and potential job losses. Additionally, factory activity has shrunk as interest rate hikes in the U.S. and Europe have dampened the demand for exports to China.
A government survey conducted in April found that a record number of one in five young urban workers was unemployed. Although economic growth accelerated to 4.5% year-on-year in the three months to March from 2.9% in the previous quarter, forecasters believe that the peak of the recovery is likely past. The ruling Communist Party’s official target for growth this year is “about 5%.”
China’s global trade surplus also shrank 16.1% from a year ago to $65.8 billion in May, according to the General Administration of Customs. Export growth fell 6.7% to just over $1 trillion from the same five-month period in 2022, with growth falling close to zero. Exports increased by 0.3% to $1.4 trillion.