China's trade gap smaller, imports jump

China posted a smaller-than-expected trade surplus in May of $13.1 billion because of soaring imports and weaker global demand growth, giving mixed signals about how the economy fared when some of its best export customers faltered. China's sales to the United States and the European Union slumped to their weakest since late 2009, excluding Lunar New Year holidays, underlining the view that the world economy is stumbling.
Still, as an engine of growth, import figures suggested China's economy is expanding at a healthy, if not stellar, pace. Crude imports stayed at elevated levels and coal volumes rose by more than a fifth from both April and a year earlier. "The overall strength in imports suggests that China's domestic demand has not slowed as much as the market may have feared," said Wang Tao, an economist with UBS in Beijing.
Exports rose 19.4 percent in May from a year earlier, slowing from the 29.9 percent pace in April, while import growth accelerated to 28.4 percent from 21.8 percent in April, the customs agency said on Friday. The export growth was shy of economists' expectations for a 21 percent rise, while the imports came in faster than the consensus call for 22.5 percent.
The trade surplus rose from $11.4 billion in April, but was far below forecasts in a Reuters poll for $18.6 billion. "The general message is neither weak nor strong," said Ken Peng, an economist with Citigroup in Beijing. Indeed, the data offered a little something for everyone, which may explain why financial markets showed no significant reaction.
Trade data for China is always closely watched because it is the world's biggest exporter and second-biggest economy. May's figures took on even greater significance as economists try to gauge whether a slowdown in the world economy is a just a blip or the start of a more troubling slump.
Exports to the United States rose by a modest 7.2 percent from a year ago, well off the 25 percent growth pace in April. For the European Union, exports rose 13.2 percent, less than half the rate recorded in April. Outside of the volatility caused by Lunar New Year holidays, both marked the weakest exports since November 2009, when the world economy was still feeling the aftermath of the global financial crisis.
Economists had widely expected export growth to slow after a series of manufacturing surveys showed weaker orders from most of China's big trading partners. But the pace slowed a tad more than economists had predicted. On a seasonally adjusted basis, exports in May rose 16.6 percent from a year earlier but fell 4.4 percent from the previous month. Imports gained 23.1 percent year-on-year but were down 4.5 percent month-on-month.