China's exports down in May

China's foreign trade growth slowed sharply in May amid forecasts that the GDP of the second largest economy is poised to decline to around 7.5 per cent this year.
Total foreign trade volume grew 0.4 per cent year on year last month to USD 345.1 billion, a significant pullback from the 15.7-per cent gain seen in April, the General Administration of Customs said today.
Exports inched up merely one per cent year-on-year to USD 182.77 billion, while imports declined 0.3 per cent to USD 162.34 billion leaving China with a surplus of USD 20.43 billion for the month.
From a month earlier, exports went down 2.3 per cent and imports shed 3.0 per cent, state-run Xinhua news agency reported.

China's GDP growth slowed to 7.7 per cent in the first quarter of 2013 from the 7.9-per cent expansion logged in the fourth quarter of last year.
IMF projected China's GDP to grow around 7.5 per cent this year from last year 7.8 per cent.

"The weaker-than-expected May data reflects China's recent crackdown on hot money inflows," said Chang Jian, China economist with Barclays Capital.
Rising momentum in China's foreign trade in recent months, against the background of poor strength elsewhere, has raised suspicions that companies may have misreported exports to obtain tax rebates or to bypass the country's capital controls to move money into the mainland, prompting authorities to create new rules to check trade flows.

Earlier last month, the State Administration of Foreign Exchange said it would increase scrutiny of exporters and hand down warnings to those found to be sneaking funds to China through trade.
Wendy Chen, a Shanghai-based economist at Nomura Securities, said the rapid appreciation of the yuan amid quantitative easing in other countries was another factor swamping demand for Chinese exports.
The central parity rate of the yuan strengthened by 117 basis points to reach a new high of USD 6.1620 against the US dollar yesterday.
Since the beginning of April, the yuan has hit a historic high 19 times, a trend that analysts largely believe is not sustainable.

Nomura expects China's foreign trade to maintain soft growth in the following months.
But Liu Ligang, chief greater China economist at ANZ Banking Group, said severe challenges lie ahead, as trade frictions are on the rise.
This week, the European Union decided to impose duties on imports of Chinese solar panels. China subsequently opened an anti-dumping and anti-subsidy investigation into wine imported from the EU.