China’s im­ports, ex­ports ex­ceed fore­casts

The Star Early Edition - - BUSINESS REPORT -

CHINA re­ported stronger than an­tic­i­pated ex­ports and im­ports for last month de­spite fall­ing com­mod­ity prices, sug­gest­ing the econ­omy is hold­ing up bet­ter than ex­pected de­spite ris­ing lend­ing rates and a cool­ing prop­erty mar­ket.

Con­cerns over China landed squarely back on global in­vestors’ radar af­ter Moody’s In­vestors Ser­vice down­graded its credit rat­ing last month, say­ing it ex­pects the coun­try’s fi­nan­cial strength will erode in the com­ing years as growth slows and debt con­tin­ues to rise.

China’s im­ports have been strong in re­cent months, driven largely by iron ore and other com­modi­ties used to feed a year-long con­struc­tion boom, while ex­ports have re­bounded from sev­eral years of con­trac­tion thanks to im­prov­ing global de­mand.

While the strength of the May im­port data sur­prised econ­o­mists, and sug­gested do­mes­tic de­mand re­mains solid, an­a­lysts still ex­pect the world’s sec­ond-largest econ­omy to lose mo­men­tum grad­u­ally over the course of the year due to pol­icy tight­en­ing.

Gov­ern­ment mea­sures to cool heated home prices are ex­pected to dampen prop­erty in­vest­ment even­tu­ally and a crack­down on riskier types of lend­ing is push­ing up fi­nanc­ing costs.

Out­look

“The cur­rent strength of im­ports is un­likely to be sus­tained if, as we ex­pect, slower credit growth feeds through into weaker eco­nomic ac­tiv­ity in the com­ing quar­ters,” Cap­i­tal Eco­nom­ics’s Ju­lian Evans-Pritchard said.

“Ex­port growth is also likely to edge down but should fare bet­ter than im­ports given the up­beat out­look for China’s main trad­ing part­ners.”

Growth in both ex­ports and im­ports ac­cel­er­ated from April, de­fy­ing ex­pec­ta­tions of a slow­down.

Ex­ports rose 8.7 per­cent from a year ear­lier, while im­ports ex­panded by 14.8 per­cent from the year ear­lier, of­fi­cial data showed yes­ter­day.

That left the coun­try with a trade sur­plus of $40.81 bil­lion (R526.2bn) for the month, the Gen­eral Ad­min­is­tra­tion of Cus­toms said.

An­a­lysts polled by Reuters had ex­pected May ship­ments from the world’s largest ex­porter to have risen 7.0 per­cent, eas­ing from 8.0 per­cent growth in April.

Im­ports had been ex­pected to have climbed 8.5 per­cent, pulling back from 11.9 per­cent in April.

That was ex­pected to pro­duce a trade sur­plus of $46.32bn, widen­ing from April’s $38.05bn.

Sources at two steel mills said they ex­pect out­put to re­main high as profit mar­gins and de­mand are still strong

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