Export growth flourishes

Export growth in dollar terms rose to a stronger-than-expected 1.1 percent.

China’s export growth in dollar terms was stronger than expected at 1.1 percent year on year in May, reversing the 2.7 percent decline in April.

Imports, however, retreated by 8.5 percent compared to 4 percent growth in the previous month, the sharpest year-on-year slump since August 2016.

The trade surplus surged to US$41.6 billion in May from US$13.8 billion in April, data from the General Administration of Customs showed on Monday. The monthly average in 2018 was US$29.2 billion.

"We believe the May rebound in export growth was mainly due to the front-loading of US-bound exports following the Trump administration’s initiation of a formal process for implementing an additional tariff of 25 percent on the remaining US$300 billion list on May 13, as well as the easing distortions related to the value-added tax cut," said Lu Ting, chief China economist at Nomura.

As for imports, the Australia and New Zealand Banking Group attributed the weakness to a decline in global oil prices, and softness in major commodity imports as well as mechanical and electrical imports.

In yuan terms, exports surged 7.7 percent year on year to 1.3 trillion yuan (US$187 billion) in May, higher than the expected 4.7 percent and the 3.1 percent rise in the previous month, while imports fell 2.5 percent to 1.2 trillion yuan last month reversing the 10.3 percent increase in April.

For the first five months this year, foreign trade of goods added up to 12.1 trillion yuan, up 4.1 percent from the same period last year.

Among them, exports jumped 6.1 percent to 6.5 trillion yuan, while imports rose 1.8 percent to 5.6 trillion yuan.

General trade grew fast, advancing 6.1 percent to total 7.25 trillion yuan, accounting for 59.9 percent in total imports and exports, 1.1 percentage points higher than the proportion in the same five months last year.

As for regions, the European Union was the largest trading partner at 1.9 trillion yuan, up 11.7 percent to account for 15.7 percent of all foreign trade. Exports rose 14.2 percent to 1.13 trillion yuan, while 765 billion yuan was imported from the EU, up 8.3 percent, putting the trade surplus with the EU up 28.7 percent to 370 billion yuan.

Trade with ASEAN totaled 1.63 trillion yuan, an increase of 9.4 percent, accounting for 13.5 percent of the total.

Trade with the United States contributed 11.7 percent of total imports and exports, with the value down 9.6 percent to 1.42 trillion yuan, of which exports fell 3.2 percent to 1.1 trillion yuan while imports slumped 25.7 percent to 335 billion yuan. As a result, China's trade surplus with the US expanded 11.9 percent to 751 billion yuan.

China Customs also highlighted growth in foreign trade with countries along the Belt and Road, posting an increase of 9 percent to total 1.1 trillion yuan.

Commodities imports were mixed. Imports of crude oil and natural gas increased by 7.7 percent and 13.4 percent respectively in amount, while imports of soybeans dropped 12.2 percent.

"While we believe that it is still too early to conclude if the renewed trade tensions have impacted imports in May, worsening trade relations between China and the US remain a key headwind for commodity demand," said Daniel Hynes, senior commodity strategist of the ANZ Group.

"We expect China’s stimulatory measures to potentially mitigate some of the demand concerns."


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