China’s imports decreased at their slowest pace in more than a year-and-a-half in May, official data showed Wednesday, in a possible sign domestic demand in the world’s second-largest economy may be recovering.
The country is a key driver of world growth and its demand for commodities has enormous implications for resource-rich nations from Australia to Nigeria.
China’s imports have been shrinking since late 2014 as the country’s once blistering expansion lost steam, slowed down by manufacturing overcapacity, a slowing property market and mounting debt.
But the year-on-year drop of 0.4 percent in May imports marked the slowest rate of decline since October 2014, when they grew 4.6 percent, customs data showed.
The results were also well ahead of the Bloomberg News median forecast of a 6.8 percent decrease based on a poll of economists.
“Recovering commodity prices and relatively resilient domestic demand are driving a recovery in import growth,” Julian Evans-Pritchard, an analyst with research firm Capital Economics, said in a note.
The value for May imports stood at $131.1 billion, according to the Chinese customs office.
The improvement in imports is likely to last for the remainder of this year and “return to positive territory before long” partly because “the continued feed-through from earlier policy easing helps to prop up domestic demand,” said Evans-Pritchard.
However, exports fell 4.1 percent last month from a year ago to $181.1 billion, following a 1.8 percent decline in April and leaving a trade surplus of just under $50 billion, the figures showed.
The key export sector has shown year-on-year declines for eight of the past 10 months as the country’s economic growth has fallen to its slowest level in a quarter of a century.
Steel and aluminum exports continued to rise by volume in May, as the international community takes Beijing to task over concerns that it is flooding the market with the commodities.
China’s steel exports increased 20 percent last year to 112 million tons, a record high, and in May rose 2.4 percent year-on-year to 9.4 million tons, official data showed.
China shipped 420,000 tons of aluminum last month, up 2.4 percent on year, according to the customs.
The increases come as countries around the world blame China for a supply glut that has left industry in Europe and elsewhere in turmoil.
As part of its promised reforms, the government has listed reducing overcapacity and excess inventory and cutting down borrowing as top priorities, with the country’s ailing steel industry a key target.
But foreign governments say they have seen little movement toward implementing its promises to tackle the problem.
The issue was a major sticking point at a key annual meeting between the US and China this week, where American treasury secretary Jack Lew said Chinese steel and aluminum production has had a “distorting and damaging effect on global markets,” an accusation angrily denied by his Chinese counterpart.
Washington has punished Beijing with harsh tariffs, most recently in March, when it slapped a 300 percent rate on the cold rolled steel used to make auto parts.
The EU, the second-biggest steel producer, has launched a dumping probe into Chinese steel, with angry manufacturers urging it to mirror the US’s tough tariffs.