Chinese import demand stronger than expected in May

Asia´s largest economy saw a smaller than expected increase in its foreign trade surplus for May as import demand was unexpectedly strong.

China's global trade surplus widened to $49.98bn in May from April's $45.6bn, missing estimates of $55.70bn.

Exports fell 4.1% year-on-year, compared to analysts’ forecast for a 4% drop and the previous month’s 1.8% slide. Nevertheless, in seasonally adjusted terms they were slightly positive, Capital Economics´s Julian Evans-Pritchard pointed out in a research note sent to clients.

"China’s export growth is likely to remain subdued going forward. While we don’t anticipate much more of a slowdown in global growth given that the worst is probably over for many emerging markets, we don’t foresee a significant pick-up either," he added.

Imports dipped 0.4% year-on-year in May but it was an improvement on April’s 10.9% plunge and better than expectations for a 6.8% decrease.

Evans-Pritchard also highlighted that while much of the improvement appeared to be releated to the recovery in commodity prices worldwide, volumes had also increased "suggesting that domestic demand is still benefiting from policy support."

Michael Hewson, chief market analyst at CMC Markets, was warier, saying: “with recent Chinese data also showing signs of weakness after a decent end to the first quarter, there is a worry that both the US and Chinese economies are hitting a soft patch in the second quarter at a time when central bank arsenals are starting to look a little depleted.”