China exports slow and deflation deepens as tariffs bite

STORY: There were more signs Monday that U.S. tariffs are starting to bite in China.

New figures showed exports rising just 4.8% on the month in May.

That was well down on April, and the slowest rate for three months.

Imports also tumbled far more than expected.

Overseas shipments had surged earlier in the year, as U.S. firms rushed to stock up on Chinese-made goods before the tariffs kicked in.

That meant some slowdown had been expected later in the year, but May’s figure was still worse than forecast.

One analyst said exports were probably also hit by tough customs inspections, with China looking to enforce its own curbs on shipments to the U.S.

Monday’s figures also showed declines in Chinese imports of oil, coal and iron ore – adding to signs of weak demand at home.

That also showed up in producer and consumer price data.

Both extended declines, with producer prices dropping 3.3% in May – the sharpest contraction in 22 months.

In a symbol of the sagging demand, U.S. coffee chain Starbucks said Monday it would lower prices in China for some iced drinks.

Now the numbers are likely to increase pressure on policymakers to step in with more stimulus measures.

Beijing last month rolled out moves including cuts to benchmark interest rates, with more steps now widely expected over the course of this year.