China's Exports Surge: A Ray of Hope Amid Economic Uncertainty

China's exports rose by 7.6% in May, suggesting that factory owners are finding buyers overseas, offering some relief to the economy. However, domestic demand remains weak due to a prolonged property crisis, and the sustainability of export sales is still in question. Recent data highlights mixed signals for China's economic outlook.

Reuters | Updated: 07-06-2024 09:46 IST | Created: 07-06-2024 09:46 IST
China's Exports Surge: A Ray of Hope Amid Economic Uncertainty
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China's exports grew more quickly and for a second month in May, suggesting factory owners are managing to find buyers overseas and providing some relief to the economy as it battles to mount a durable recovery. The jury is still out, however, on whether the export sales are sustainable while a protracted property crisis has led to persistent weakness in domestic demand - a factor highlighted again in last month's imports figures.

Outbound shipments from the world's second-largest economy grew 7.6% year-on-year in value in May, customs data showed on Friday. But imports increased at a slower 1.8% pace, from a 8.4% jump in the previous month, highlighting the fragility of domestic consumption.

The export figure beat a forecast 6.0% increase in a Reuters poll of economists and a 1.5% rise seen in April, but was likely also aided by a lower base of comparison, after rising interest rates and inflation in the U.S. and Europe squeezed external demand in the previous year. Friday's shipments data possibly also suggests a global cyclical upturn in the electronics sector is helping China's sales of components and finished manufactured goods.

Over recent months, a flurry of data has shown different parts of the $18.6 trillion economy recovering at varying speeds, heightening uncertainty about the outlook. While first quarter growth blew past forecasts and strong March export and output data suggested improving global demand might aid officials' efforts to get the economy back on a more even keel, more recent indicators reflecting soft domestic consumption have eroded much of that earlier optimism.

A protracted property sector crisis remains the biggest drag on China's economy, with low investor and consumer confidence hurting domestic consumption and undermining business activity. Adding to the worries for policymakers, both the new orders and new exports orders sub-indices of a factory owners survey run by the National Bureau of Statistics for May tipped back into contraction after two months of growth.

However, Friday's trade data should give authorities some breathing space as they continue their efforts to foster a broad-based economic recovery. The International Monetary Fund last month upgraded its China growth forecast for 2024 in line with Beijing's growth target of "around" 5%, but warned of risks to the economy from the property troubles.

China's trade surplus grew to $82.62 billion last month, compared with a forecast of $73 billion and $72.35 in April.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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