On Monday, June 8, the Chinese General Administration of Customs announced its report on exports and imports for the month of May 2015. (Source: General Administration of Customs, June 8, 2015.)
Exports and Imports Declined Year-Over-Year
Total exports were valued at 1.17 trillion yuan ($191.16 billion) for the month of May, 2.8% lower compared to same time last year. However, despite being lower than last year, the gap is getting narrower compared to the 6.2% decline in April and 14.6% drop in March.
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According to HSBC chief China economist Qu Hongbin, the improvement in exports was mostly from increasing trade with G3 economies, in particular the United States.
However, the improvement this month was not enough for analysts to see strong recovery in China’s exports in the future. An HSBC research note said, “Although the U.S. economy is expected to rebound in the second quarter, we expect export outlook to remain challenging in the coming months, partly due to a strong currency.” (Source: Sina, June 8, 2015.)
Imports dropped a more dramatic 18.1% from a year ago to 803.33 billion yuan ($129.48 billion). This is an even bigger drop compared to April’s 16.2% slump.
The big drop in imports helped to boost China’s trade surplus, which is calculated by subtracting imports from exports. For May, China’s trade surplus was $59.1 billion, up from April’s $34.1 billion.
Despite the high trade surplus, HSBC thinks that its “contribution to GDP growth will be quite negligible.” HSBC also thinks that the poor performance of exports will put pressure on investment in manufacturing, on the sector’s employment, and firms’ sentiment.
Based on the import and export results, HSBC’s chief China economist expects that the country will conduct more expansionary monetary and fiscal policies. The People’s Bank of China, the Chinese central bank, has already lowered its benchmark interest rate three times in less than six months.