BEIJING- China’s exports grew more quickly and for a second month in May, suggesting factory owners are managing to find buyers overseas and providing some relief to the economy as it battles to mount a durable recovery.
The jury is still out, however, on whether the export sales are sustainable while a protracted property crisis has led to persistent weakness in domestic demand – a factor highlighted again in last month’s imports figures.
“Headline export numbers are surprisingly good, and that confirms the underlying trend, volumes are running very high,” said Frederic Neumann, chief Asia economist at HSBC.
“China is currently so competitive, that even trade restrictions wouldn’t really slow the export juggernaut that’s underway.”
However, “if US demand buckles, then the global trade cycle is quickly going to fizzle,” Neumann said, adding that a sustainable longer term growth strategy for China requires its domestic engine to fire up.
Outbound shipments from the world’s second-largest economy grew 7.6 percent year-on-year in value in May, customs data showed on Friday.
But imports increased at a slower 1.8 percent pace, from a 8.4 percent jump in the previous month, highlighting the fragility of domestic consumption.
The export figure beat a forecast 6.0 percent increase in a Reuters poll of economists and a 1.5 percent rise seen in April, though growth was likely also aided by a lower base of comparison, after rising interest rates and inflation in the US and Europe squeezed external demand in the previous year.
Over recent months, a flurry of data has shown different parts of the $18.6 trillion economy recovering at varying speeds, heightening uncertainty about the outlook.
While first quarter growth blew past forecasts and strong March export and output data suggested improving global demand might aid officials’ efforts to get the economy back on an even keel, more recent indicators reflecting soft domestic consumption have eroded much of that earlier optimism.
Indeed, separate data for May on commodities imports also released on Friday highlighted a mixed picture of demand conditions at home, with purchases of crude oil and soybeans down year-on-year, while copper and iron ore saw a solid uptick.
