China exports surge in May, trade balance grows while imports shrink

Investing.com-- Chinese exports grew more than in May, buoyed by steady industrial output and overseas demand, which saw the country’s trade balance grow much more than expected. 

Chinese exports grew 7.6% year-on-year in May, data from the Customs Administration showed on Friday. The rise was much higher than expectations of 6%, and rebounded sharply from the 1.5% rise seen in the prior month.

Strong exports indicated that Chinese industrial production, which is a key economic driver, remained steady, while overseas demand was also picking up after a lull through most of last year.

But consistently strong Chinese exports raised some concerns over China’s biggest export destinations imposing some curbs on Chinese goods due to oversupply and dumping concerns. The U.S. had earlier this year hiked import duties on several Chinese industries, raising concerns that other developed economies could also follow suit.

Strong exports saw China’s trade balance widen to a surplus of $82.62 billion, compared to expectations of $70.50 billion and April’s reading of $72.35 billion.

But a spike in China’s trade surplus was also driven by weak imports, which grew only 1.8% year-on-year in May. The figure was much weaker than expectations for a rise of 4.2%, and slowed significantly from the 8.4% growth seen in the prior month. 

Weak imports indicated that even though some facets of the Chinese economy were picking up, domestic demand remained largely subdued. This trend could herald continued weakness in key aspects of the Chinese economy, particularly consumer spending and inflation.