China’s May trade data
On June 10, China released its trade data for May. The country’s dollar-denominated exports rose 1.1%, while its imports in US dollar terms fell 8.5%. China’s May trade data was a mixed bag for markets. While the exports were better-than-expected, the imports were lower compared to the expectations.
Except for April when China’s imports rose 4%, the country’s import data has been weak and fell for four consecutive months before April. After accounting for May, China’s imports have fallen on a year-over-year basis in five of the last six months. Fewer Chinese imports reflect sagging domestic demand. While China said that its economy grew 6.4% in the first quarter, some of the recent data points have shown moderation in the economy. Falling imports point to a slowdown in China’s domestic demand. Chinese equity markets have underperformed global markets this year. The iShares China Large-Cap ETF (FXI) has risen 3.7% year-to-date, while the SPDR S&P 500 ETF (SPY) has gained 15.6%.
Since China’s exports increased more than expected and imports missed the mark, the country’s trade surplus ballooned to $41.65 billion. China’s May trade surplus was almost double analysts’ expectations—a sharp rise from the $13.8 billion surplus reported in April. China’s April trade surplus was lower than expected. The country’s imports rose, while exports fell in April.
Amid the escalation in the US-China trade war, there has been pressure in Chinese stocks. Alibaba (BABA), Baidu (BIDU), and JD.com (JD) have lost 15.5%, 33.4%, 11.1% in the second quarter. Last year, Alibaba’s co-founder Jack Ma predicted that the US-China trade war could last for decades. Despite the second-quarter sell-off, Alibaba has risen 12.5% for the year. US stock markets have also been impacted by the trade war. They have recouped some of their losses in June.