As Economy Holds Up Better Than Expected, Chinese Exports And Imports Top Expectations

Suggestion that the Chinese economy is holding up better than expected despite rising lending rates and a cooling property market is made as China reported stronger-than-anticipated exports and imports for May despite falling commodity prices.

Saying that it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise, Moody’s Investors Service downgraded China’s credit rating last month which led to growing concerns over China which ultimately however landed squarely back on global investors’ radar.

In China, while exports have rebounded thanks to stronger global demand after several years of contraction, imports have been strong in recent months, driven largely by iron ore and other commodities used to feed a year-long construction boom.

Still, as measures to cool heated home prices dampen property investment and a crackdown on riskier types of lending pushes up financing costs analysts forecast the economy will gradually lose momentum over the rest of the year and they had expected trade growth to cool in May.

But accelerating from April are growth in both exports and imports which have defied those expectations from analysts. Official data showed on Thursday that while imports expanded 14.8 percent, China’s May exports rose 8.7 percent from a year earlier.

The General Administration of Customs said that this resulted in the country being left with a trade surplus of $40.81 billion for the month.

May shipments from the world’s largest exporter was expected to have risen 7.0 percent according to analysts polled by Reuters. Exports rose 8.0 percent on-year in April.

After rising 11.9 percent in April, imports were expected to have climbed 8.5 percent.

From April’s $38.05 billion, analysts were expecting China’s trade surplus to have widened to $46.32 billion in May.

According to data from China’s customs bureau, up from $21.34 billion in April, China’s trade surplus with the U.S. was $22.0 billion in May.

In an effort to reduce the massive U.S trade deficit with Beijing, the 100 days of trade talks, which was agreed by United States President Donald Trump and Chinese President Xi Jinping when they met in Florida in April, have been initiated by the world’s two biggest economies.

Action to increase access for U.S. financial firms and expanding trade in beef and chicken among other steps were agreed upon by the two countries in May, were action was to be taken by mid-July, which is a sign of progress.

China’s vice commerce minister Yu Jianhua told a news conference on May 12 that the second largest economy of the world does not deliberately pursue a trade surplus with the United States.

According to a statement on the website of China’s Ministry of Commerce, the two sides should strengthen cooperation and manage disputes in trade, were reportedly said by China’s commerce minister Zhong Shan recently told new United States Trade Representative Robert Lighthizer.

(Adapted from CNBC)

Categories: Economy & Finance, Geopolitics

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