China worry extends as imports, exports fall

By Fran Wang AFP

BEIJING — Chinese imports fell for a seventh straight month in May while exports also sank, according to official data Monday, as the world’s second biggest economy shows protracted weakness despite government easing measures. The disappointing figures also come as leaders try to transform the economy to one where growth is driven by consumer spending rather than by government investment and exports. Imports slumped 17.6 percent year-on-year to US$131.26 billion, the General Administration of Customs said in a statement. The decline was much sharper than the median forecast of a 10 percent fall in a Bloomberg News poll of economists and followed April’s 16.2 percent drop. ��The May trade data … suggest both external and domestic demand remain weak,�� said Julian Evans-Pritchard, an analyst with research firm Capital Economics, in a note. Exports dropped for the third consecutive month, falling 2.5 percent to US$190.75 billion, Customs said, although that was better than the median estimate of a four percent fall in the Bloomberg survey. The sharp decrease in imports meant the trade surplus expanded 65.6 percent year-on-year to US$59.49 billion. In yuan terms imports fell 18.1 percent, exports decreased 2.8 percent and the trade surplus expanded 65.0 percent. The figures provided further evidence that frailty in the Chinese economy, a key driver of world growth, has extended into the current quarter despite intensified government stimulus measures. Gross domestic product (GDP) grew 7.4 percent in 2014, the lowest rate in nearly a quarter of a century, while the new year has shown few signs of a reversal in the slowing trend.

GDP expanded 7.0 percent in January-March, the worst quarterly result in six years and weaker than the final three months of 2014. Beijing has set the target for the economy to grow by ��around seven percent�� this year, lower than its target for 2014, which was about 7.5 percent. British bank HSBC’s Purchasing Managers’ Index (PMI) contracted for the third straight month in May and economists expect the shrinkage to extend into mid-year.