China's May imports accelerate, exports weaken

[June 10, 2011]  BEIJING (AP) -- China's import growth accelerated in May in a sign the world's second-largest economy might not be slowing as sharply as some fear, while exports weakened amid slower global demand.

Imports rose 28.4 percent over a year ago, up from April's 21.8 percent growth rate and beating most forecasts, data showed Friday. Export growth eased to 19.4 percent from April's 29.9 percent.

"Today's trade data should go some way to ease fears that China's economy is heading for a hard landing," said Capital Economics analyst Mark Williams in a report.

China's politically sensitive monthly global trade surplus widened to $13 billion, the highest level this year and an increase over April's $11.4 billion.

Indicators of industrial activity are weakening, prompting concern Beijing's efforts to steer rapid economic growth to a more sustainable level with lending and investment curbs might lead to a hard landing.

A sharp slowdown in China could cause global repercussions if it cuts into demand for oil, iron ore and other imports for which the Chinese economy is a major customer.

The economy grew by a rapid 9.7 percent in the first quarter of this year, but other data show manufacturing, bank lending and other activity cooling following four interest rate hikes since October.

Analysts said that despite the unexpected strength in May imports, underlying momentum for trade growth was weak.

May imports were $144.1 billion, while exports were $157.2 billion, the General Administration of Customs reported.

China's trade surplus with the United States narrowed by 5.3 percent from a year ago to $15.8 billion. Growth in exports to the American market fell to 18.7 percent over a year ago, from April's 22.4 percent.

The trade surplus with the 27-nation European Union, China's biggest trading partner, fell 11.6 percent to $10.6 billion. Growth of exports to Europe fell to 18.2 percent over a year ago from April's 19.7 percent.

"Further slowdown is likely in exports in the coming months," said Citigroup analysts in a report.

Imports from Japan rose 7.8 over a year ago after growth dipped to 4.6 percent in April following the March 11 earthquake and tsunami that forced thousands of Japanese factories to close, disrupting flows of industrial components.

"This suggests that the earthquake-related supply chain disruptions may have eased," said UBS economist Tao Wang in a report.

A gradual rise in China's yuan against the dollar in recent months could help to support demand for imports by making prices cheaper in local currency terms.

Beijing is under pressure from Washington and other trading partners to ease controls that they complain keep the yuan undervalued and swell China's trade surplus. The government has allowed the currency to rise but not as fast as critics want.

China recorded a trade deficit for the first three months of 2011 and a surplus of just $140 million for March.

Analysts expect China to show a global trade surplus for the year of $160 billion to $200 billion. Last year, China ran a trade surplus of about $16 billion a month.

An index of manufacturing issued by the government-affiliated China Federation of Logistics and Purchasing found new orders, production, new export orders and purchasing prices fell in May.

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Online:

General Administration of Customs (in Chinese):
http://www.customs.gov.cn/

[Associated Press; By JOE McDONALD]

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