China Exports Grew for Third Straight Month in May--Update

By Mark Magnier Features Dow Jones Newswires

Chinese exports in May were up 8.7% from a year earlier, more than expected, as resilient global demand drove a third straight monthly increase.

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The increase followed an 8% gain in April and beat the 7% forecast of economists polled by The Wall Street Journal.

Imports in May were up 14.8%, the General Administration of Customs said Thursday, accelerating from April's 11.9% pace. China's trade surplus widened to $40.81 billion from $38.05 billion.

The world's second-largest economy got off to a strong start this year with first-quarter growth of 6.9%, the best in a year and a half. But in recent weeks, data that tracks factory inflation, industrial output and corporate profits have all weakened. May's trade data bucks the trend.

"Overall, I still think first-quarter growth was the peak," said Standard Chartered Bank Ltd. economist Shuang Ding, "with export growth perhaps the only bright spot."

Economists say Chinese exports last month benefited from strong U.S. and European Union demand--China's shipments to both grew at close to double-digit rates from a year earlier--and a more stable Chinese currency. Since the beginning of the year, the yuan has been relatively stable against the dollar and a basket of currencies, providing a tailwind for exporters after a volatile 2016.

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The monthly trade data augurs well for global trade. While exports have become a less-important growth driver for China in recent years as its domestic economy expands, the country remains the world's top exporter as well as its top commodity importer, so its trade data is closely watched as a barometer of global demand.

In April, the World Trade Organization forecast that global merchandise trade volume would grow 2.4% this year, up from last year's anemic 1.3%--though it warned that policy uncertainty and protectionism could undermine a more-robust trade recovery.

Guangdong Wanshida Industry Co., which exports stainless-steel cutlery to North America, Europe and the Middle East from the southern Chinese city of Jieyang, said its foreign orders have grown steadily in recent months, helped by lower raw-material prices and a weaker yuan.

U.S. President Donald Trump pledged during his election campaign to impose punitive tariffs on China for what he termed unfair trading practices. Relations improved after Mr. Trump and President Xi Jinping agreed on a one-year plan to expand bilateral trade during an April meeting in Florida. But tensions remain.

Smaller companies like Guangdong Wanshida remain highly vulnerable to protectionism, said Chen Shaozhi, its sales manager, although most of its orders come from markets other than the U.S.

"Hopefully Mr. Trump's decisions won't have that much impact on us," Ms. Chen added.

In late April, China's Ministry of Commerce rejected U.S. claims that China is responsible for the global steel glut. The 117-page report attributed the glut to shrinking global demand and said it is "untenable" for Washington to blame U.S. job losses on Beijing's support of its domestic steel industry.

China's imports grew nearly twice as fast as expected last month, driven by residual demand from a strong property market, economists said. They added that they expect China's economic growth to slow gradually in coming months as Beijing tries to rein in debt and reduce systemic risk by imposing more restrictions on property buyers and on financial transactions.

"The current strength of imports is unlikely to be sustained," said Julian Evans-Pritchard, economist with Capital Economics, in a report. Export growth is also likely to edge down, he added, "but should fare better than imports given the relatively upbeat outlook for China's main trading partners."

Liyan Qi contributed to this article.

Write to Mark Magnier at mark.magnier@wsj.com

(END) Dow Jones Newswires

June 08, 2017 03:06 ET (07:06 GMT)