© Reuters. FILE PHOTO: An employee attends visitors at a retail kiln shop at the China Import and Export Fair, also known as the Canton Fair, in Guangzhou, Guangdong Province, China, April 16, 2023. REUTERS/Ellen Zhang/File Photo
Written by Joe Cash
BEIJING (Reuters) – China’s imports are expected to contract in May, despite a lower base last year, as a lockdown in Shanghai brought the country’s largest port to a standstill, while exports likely fell for the first time in three months, according to a Reuters poll. . show up.
Inbound shipments to the world’s second-largest economy were expected to decline 8.0% year-on-year, after a 7.9% decline in April, according to the median forecast of 26 economists in the poll completed Monday.
Exports are expected to contract 0.4% from a year earlier versus 8.5% growth in April, reflecting weak global demand for Chinese goods and in line with weak import performance as China brings in parts and materials from abroad to assemble into finished products for export.
Chinese trade data will be released on Wednesday.
The downbeat outlook for exports suggests that Chinese exporters have caught up to unfulfilled orders after last year’s COVID-19 disruptions and that global demand is insufficient to sustain a rebound in outbound shipments.
The official manufacturing Purchasing Managers’ Index (PMI) last Wednesday showed that Chinese factory activity contracted faster than expected in May on weaker demand, but a private sector survey released on Thursday turned unexpectedly into growth.
Official sub-indices of the May PMI showed that factory output swung to contraction from expansion while new orders, including new exports, fell for a second month.
South Korea’s shipments to China, a leading indicator of China’s imports, fell 20.8% in May, marking the 12th consecutive annual loss, but the pace eased to the slowest in seven months.
China’s economy grew faster than expected in the first quarter due to strong consumption of services, but factory production continued to slow amid persistent weak global growth.
Analysts are now lowering their forecasts for the economy with Nomura and Barclays (LON:) Both cut China’s GDP growth forecast for 2023
The government has set a modest GDP growth target of around 5% for this year, after sorely missing the 2022 target.
(This story has been reworked to correct hyperlink formatting in points)
(Poll by Devayani Sathyan and Sujith Pai; Reporting by Joe Cash; Editing by Jacqueline Wong)