BEIJING, China: In May, Chinese exports declined at a faster rate than expected, and imports, especially to developed countries, continued to slow, raising concerns about the country’s fragile economic recovery.

Due to strong demand for services and a backlog of orders following the COVID-19 pandemic, the Chinese economy grew faster than expected in the first quarter.

However, as rising interest rates and inflation stifled demand in the US and Europe, Chinese factory output subsequently slowed.

New data from China’s Customs Bureau reported that exports dropped 7.5 percent year-on-year in May, higher than the predicted 0.4 percent fall and the largest decline since January, while imports contracted 4.5 percent, slower than an expected 8.0 percent decline and April’s 7.9 percent drop.

“The weak exports confirm that China needs to rely on domestic demand as the global economy slows,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, as reported by Reuters.

The data also showed that trade was lower that even than when China’s busiest port city, Shanghai, was locked down last year due to strict COVID-19 restrictions.

Adding to a growing list of negative indicators, these figures indicate that China’s post-COVID-19 economic recovery is struggling to gain momentum, supporting the case for more policy stimulus.

Slowing demand at home and abroad have both hit the world’s second largest economy, with the ripple effects being felt around the wider region.

Last week, China’s official purchasing managers’ index (PMI) indicated that factory activity slowed faster than forecast in May.

The PMI’s subindexes also showed factory output began to contract, while new orders, including new exports, fell for a second consecutive month.

After missing its 2022 goal by a wide margin, the Chinese government has set a modest 2023 GDP growth target of some 5 percent.

“Looking forward, we think exports will fall further before bottoming out later this year,” said Julian Evans-Pritchard, head of China Economics at Capital Economics, as quoted by Reuters.