world growth

world growth

Monday, June 14, 2010

China records $19 billion trade surplus in May

Exports surprise, driving trade surplus

China recorded its largest trade surplus this year in May, as exports grew more than expected.

The trade surplus rose sharply to $19.53 billion in May from $1.68 billion in April when the country returned to a trade surplus after seeing a deficit of $7.24 billion for the first time in 70 months.

The country's exports went up 48.5 percent year-on-year to $131.76 billion in May, with the growth rate 18.1 percentage points higher than the previous month, the General Administration of Customs (GAC) announced Thursday.

The May exports reading was the highest since October 2008. The growth rate figure also hit a new high since March 2007.

The previous median estimate for exports by the market was 32 percent, as analysts are concerned the European sovereign debt crisis is likely to have an impact on China's exports to its largest trading partner, the European Union (EU).

However, exports to the EU jumped from $22.3 billion in April to $25.9 billion in May, according to the GAC. The bilateral trade between China and the EU totaled $177.49 billion, an increase of 37.4 percent over last year.

Likewise, exports to other major developed economies all saw an increase in May.

Exports to the US went up from 19.15 percent year-on-year in April to 44.3 percent in May, and those to Japan jumped by 37.1 percent in May.

Exports to the Association of Southeast Asian Nations rose 48 percent last month.

"Stronger-than-expected demand recovery in major developed economies seemed to be the main driver," Wang Tao, head of China Economic Research at USSecurities, said in a research note distributed Thursday.

The imports jumped 48.3 percent to $112.23 billion last month, with the growth rate slightly lower compared to April. Lu Zhengwei, a senior economist at Industrial Bank, attributed the slowing growth of imports to weakening domestic demand.

Imports are expected to grow much stronger than exports this year, as the sharply widening trade surplus was driven largely by surging growth seen in steel, copper and zinc exports, which won't be sustainable through the year, economists Sun Mingchun and Sun Chi at Nomura Securities said in a note.

They expected China's trade surplus to narrow to $70 billion this year from $196 billion in 2009.

However, Wang believes export growth, though expected to slow from the third quarter onwards, will "continue to outpace imports in volume for the rest of the year, leading to a sizable trade surplus for 2010."