China’s imports fell the most in nearly three years, another sign of weakening domestic demand that may prompt China to increase stimulus measures.
May imports were much weaker than expected, falling 8.5 percent, the sharpest drop since July 2016. That left the country with a trade surplus of $41.65 billion for the month.
Analysts had forecast imports would fall 3.8 percent, reversing an expansion of 4 percent in April, which some had suspected was related to the reduction in the VAT.
Yet, despite higher U.S. tariffs, China’s exports unexpectedly returned to growth in May.
It had been suspected by some analysts that in order to avoid the new tariffs, exporters may have rushed out shipments to the United States.
This was prompted as President Trump was threatening to impose new tariffs on $300 billion worth of goods.
China’s May exports rose 1.1 percent from a year earlier, compared with market expectations for a modest decline, customs data showed.
Analysts polled by Reuters had expected May shipments from the world’s largest exporter to have fallen 3.8 percent from a year earlier, after a contraction of 2.7 percent in April.
On May 10, the U.S. slapped higher tariffs of up to 25 percent on $200 billion of Chinese goods.
It was followed by steps to add duties on all remaining $300 billion Chinese imports. Beijing retaliated with tariff hikes on U.S. goods.
Trump has said he expects to hold a meeting with Chinese President Xi Jinping at a G20 leaders’ summit late this month.
China’s trade surplus with the United States widened to a four-month high of $26.89 billion in May, from $21.01 billion in April, Monday’s data showed.