China’s export growth steady in May, import growth faster but not from US

BEIJING: China maintained solid export growth of 12.6 per cent in May, slightly slower than in April, but still providing good news for Beijing’s policymakers as they deal with tough trade negotiations with Washington.

Imports also rose more than anticipated in May and at the fastest pace since January, with the data coming at a time when China has pledged to its trade partners – including the United States – that steps would be taken to increase imports.

China, the world’s largest exporter, has so far escaped any major blow to its foreign trade sector despite rising trade tensions with the United States, which last week warned it would continue to pursue tariffs on Chinese imports.

That bodes well for the world’s second-largest economy, as policymakers tighten access to credit domestically to prevent asset bubbles and limit heavy industry in many regions as part of a big effort to clean up severe air, water and soil pollution.

“Trade performance in Q2 so far has been better than expected and may offer some upside to Q2 GDP growth,” Betty Wang, senior China Economist at ANZ, wrote in a note.

But trade tensions with the US remain a risk.

A third round of talks between the two economic heavyweights concluded in Beijing last weekend with few signs of progress, as China issued a counter-warning that any trade and business deals reached with Washington would be void if the United States implemented tariffs.

The median forecast from a Reuters survey of 32 analysts had pointed to 10 per cent export growth in May, but the actual outturn showed little loss of momentum, coming in just a shade below the 12.7 per cent growth posted in April.

Irrespective of chances of a trade war, analysts warn that China’s export growth is likely to stall.

“Even if a trade war is avoided, Chinese trade growth is still likely to edge down over the coming year as the global economy loses momentum and headwinds to domestic demand from slower credit growth intensify,” Julian EvansPritchard, senior China economist at Capital Economics, wrote in a note following the data.

Imports grew 26 per cent in May, the General Administration of Customs said, beating analysts’ forecast of 18.7 per cent growth, and compared with a 21.5 per cent rebound in April.

Strong growth in imports were driven by purchases of computer chips as well as commodities including agricultural crude oil, copper ore and concentrate and natural gas.

China is reported to be importing record volumes of US oil and is likely to buy more US soy after Beijing signalled to state- run refiners and grains purchasers they should buy more to help ease trade tensions.

Among major trading partners, China’s imports from Australia saw biggest turnaround in growth in May, rising 22.4 per cent yearon-year after falling 3.1 per cent in April. Imports from South Korea rose 31.8 per cent in May.

China’s imports and exports both showed stronger growth over the first five months of the year than they did during the same period a year ago, customs data shows.

China’ trade surplus narrowed to US$24.92 billion in May from US$28.38 billion in April, and came in well below analysts forecasts for a US$ 31.9 billion surplus. — Reuters