Chinese exports fell at a much faster pace than expected in May, while imports also declined, albeit at a slower rate, as factories struggled to attract foreign demand amid continued weak domestic consumption. Exports from the world's second-largest economy dropped by 7.5 percent year-on-year in May, marking the largest decline since January, after recording an 8.5 percent growth in April. Imports contracted at a slower pace, falling by 4.5 percent last month. Economists had forecast a mere 0.4 percent decline in exports and an 8 percent drop in imports in a Reuters poll.
The official purchasing managers' index showed last week that Chinese factory activity contracted at a faster-than-expected pace in May due to weak demand. Sub-indices of the purchasing managers' index indicated that production shifted from growth to contraction, while new orders, including new export orders, fell for the second month. After China's economy outperformed expectations in the first quarter, analysts are now lowering their forecasts for the economy for the remainder of the year, as factory production continues to slow amid persistent weak global demand. The government has set a modest target of around five percent for GDP growth this year, after failing to meet its growth targets for 2022.
