China: Merchandise exports increase in May
Merchandise exports climbed 7.6% over the same month last year in May (April: +1.5% year-on-year), overshooting market expectations. Meanwhile, merchandise imports rose 1.8% on an annual basis in May (April: +8.4% yoy). The soft imports data hints at equally soft domestic demand.
As a result, the merchandise trade balance improved from the previous month, recording a USD 82.6 billion surplus in May (April 2024: USD 72.4 billion surplus; May 2023: USD 75.1 billion surplus). Lastly, the trend pointed up, with the 12-month trailing merchandise trade balance recording a USD 829.2 billion surplus in May, compared to the USD 811.8 billion surplus in April.
Chinese merchandise exports should rise in 2024 as a whole relative to 2023, thanks to the global electronics upcycle and China’s increasing competitiveness in sectors such as electric vehicles and batteries. That said, exports will likely rise by less than in neighboring economies such as Taiwan and Korea. This relatively soft increase will be due to Western trade and tech restrictions on Chinese products, and elevated capacity in some Chinese export sectors weighing on export prices.
On the reading and outlook, EIU analysts said:
“The data align with recent regional trade trends and affirm our view that a lift in global demand points to improved Chinese export prospects in 2024. Our forecasts expect China’s external balance to contribute positively to headline real GDP growth this year, reversing the drag recorded in 2023, when goods exports experienced a severe correction stemming from a normalisation in pandemic-era demand.”