China trade data underscores growth worries

BEIJING Sat Jun 8, 2013 7:02am EDT

A construction worker looks at Pudong financial district as he wait to cross an avenue in Shanghai May 30, 2013. REUTERS/Carlos Barria

A construction worker looks at Pudong financial district as he wait to cross an avenue in Shanghai May 30, 2013.

Credit: Reuters/Carlos Barria

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BEIJING (Reuters) - China's exports posted their lowest growth rate in almost a year in May while imports unexpectedly fell, government data showed on Saturday, underlining concerns that growth in the world's second-largest economy could slow anew in the second quarter.

Evidence has mounted in recent weeks that the economy is fast losing growth momentum as sluggish domestic demand fails to make up for lethargic export sales.

The latest figures, shorn of the hot money speculation and exports to warehouses but booked as sales that had inflated previous months' data, more accurately reflect the grim reality facing China's exporters.

"The trade data reflects the sluggish domestic and overseas demand, signaling a slower-than-expected recovery in the second quarter," said Shen Lan, an economist at Standard Chartered in Shanghai.

Data for May retail sales and industrial output, as well as investment and inflation, are due on Sunday and could provide more evidence of the slowdown.

Exports edged up 1 percent in May from a year earlier, the lowest growth since last July and against a median forecast in a Reuters poll of a rise of 7.3 percent. Data was even worse for imports - they fell 0.3 percent against expectations of a 6 percent rise.

The trade surplus was $20.4 billion for the month, compared with market expectations of $19.3 billion.

Exports to the United States, China's top export destination, fell 1.6 percent in May, the third straight month of declines, while those to the European Union, the second most important market, fell 9.7 percent, also the third straight month of declines.

However, in one bright sign, separate customs data showed that China's imports of major commodities rose in May compared with the previous month, helped by lower prices on world markets and pointing to resilient demand.


It has been an uncomfortable few months for China's leaders as a raft of data has pointed to a lack of traction for growth.

"The domestic economy is facing great downward pressure and the stable development of foreign trade still faces great challenges," Vice-Minister of Commerce Zhong Shan said in a statement on the ministry's website (

China's overseas demand had not recovered obviously while exporters faced more fierce competition in the global market, Zhong said.

However, Premier Li Keqiang struck a more upbeat note, being quoted by state television as saying that China's economy was generally stable, growth was within a "relatively high and reasonable range" and the employment situation was stable.

"There are increasingly intricate and complicated factors in the economy and we should strictly monitor the changes in the economic situation," said Li.

China needs to make use of liquidity already in the economy to support real economic development and curb over-capacity in certain industries, he added.

Surveys this month showed that China's factory activity shrank for the first time in seven months in May, with export orders falling, while growth in the services sector cooled.

A Reuters poll taken before Sunday's retail and industrial data shows industrial output is seen up 9.3 percent, unchanged from April, while growth in fixed-asset investment, one of the two main drivers of China's economy in 2012, likely rose 20.5 percent in the first five months of this year.

That would be equivalent to investment rising 20.2 percent in May from a year ago, Reuters' calculations showed, the slackest pace in at least three months.

Growth in retail sales is forecast at 12.9 percent in May, little changed from April's 12.8 percent and below last year's monthly average expansion of 14.2 percent.

The IMF and OECD last month cut their forecasts for China's 2013 economic growth to 7.75 percent and 7.8 percent, respectively.

China's annual economic growth had slowed to 7.7 percent in the first quarter from 7.9 percent in the previous quarter. The full-year annual growth of 7.8 percent in 2012 was the weakest since 1999.

However, China's leaders have adopted a greater tolerance for a slowdown and are likely to allow quarterly growth to slip as far as 7 percent before triggering fresh stimulus to lift activity, sources told Reuters this week.


One of the reasons the May export data was so grim is that the government had cracked down on the speculative activities that had created double digit rises in export growth every month this year, even as China's main markets slowed.

"The dramatic slowdown in yoy (year-on-year) export growth in May in part reflects the impact of a clamp down by the government on firms dressing up financial inflows as exports," Louis Kuijs, an economist at RBS, said in an emailed note.

China's customs also acknowledged the lack of extraneous factors, reflected in the fact that exports to Hong Kong, the main centre for currency arbitrage and warehouse storage, grew only 7.7 percent in May, down from a 57 percent surge in April.

"The arbitrage trade to Hong Kong has basically been curbed and the trade between mainland and Hong Kong dropped sharply," it said on its website,

(Additional reporting by Ben Blanchard; Editing by Jeremy Laurence and Robert Birsel)

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Comments (6)
ncshu2 wrote:
China’s import tightly correlates with the export. A good example to illustrate this is the Apple’s iphone, which is first assembled in Shenzen, then exported to US. To assemble the phone, the Chinese subsidiary of the Taiwanese Enterprise need first import electronic parts from around the world. If the order to export iphone dwindles, the imports for the electronic parts decrease first. With an export oriented economy, the import to China does not only reflect the domestic consumer demand, but also tightly correlates with the demand to export. Needless to say, with that kind of economy, the Chinese domestic consumer demand is also tied to the ability to export for sure.

Jun 08, 2013 2:44am EDT  --  Report as abuse
dareconomics wrote:
China is preparing to enter its first recession in years, and this should be an interesting test for the new government. While the official numbers hold up, the proxy numbers reveal an economy entering stall speed. Falling demand for raw materials, electricity and transportation are more telling than whatever garbage the government releases to the mainstream media.

Full post with charts, images and links:

Jun 08, 2013 1:52pm EDT  --  Report as abuse
MikeBarnett wrote:
This article reflects more US economic incompetence. China’s global trade increased 0.4% in May, but it rose 10.9% for the first five months of 2013 over the first five months of 2012. Total imports and exports reached 10.51 trillion yuan or over $1.713 trillion from January to May, 2013. Exports rose to 5.51 trillion yuan or $898.4 billion, a rise of 13.2% over 2012. Imports rose 5 trillion yuan or $815.2 billion, a rise of 8.2%. That leaves a Chinese trade surplus of $83.2 billion in five months, or $200 billion for the full year while the US is headed for a deficit of more than $500 billion in 2013.

The US Dot Bomb Bubble of 2000, the US Accounting Scandal of 2001 to 2003, and the US Financial Scandal of 2008 to the present proved that US technology, corporate, and financial leaders were liars, thieves, and criminals. The failure of US regimes to prosecute the criminals did not make the crimes disappear; it made the Bush and Obama regimes “accessories after the fact” to the crimes. The US economy remains in the hands of criminals; the Bush regime was a criminal organization; and the Obama regime is a criminal organization. This raises questions about US assertions of Chinese dishonesty in this and other articles.

The US is, at this time, economically incompetent compared to China. China’s biggest trade partner, the EU, is in recession. The US, the second biggest partner, struggles with fewer jobs and lower wages per worker that reduces spending for Chinese products. China has been increasing its markets in developing countries with infrastructure projects attached to trade deals because China trades more with rich countries than with poor nations. President Xi Jinping met with the leaders of twelve small countries and signed economic agreements before meeting Obama. China has increased trade with developing countries by double digits per year and by triple digits every five years. Small countries may be small, but 150 of them can create trade cushions in difficult times. China knows this and takes actions at the highest level while US leaders ignore most small countries.

Jun 08, 2013 3:46pm EDT  --  Report as abuse
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