Firmer global demand helps Chinese exports rise in May

China’s exports gained steam in May thanks to firmer global demand, but an unexpected fall in imports signalled weaker domestic demand that could continue to weigh on the world’s second-largest economy.

Exports rose 7% in May from a year earlier, quickening from April’s 0.9% rise, while imports fell 1.6%, versus a rise of 0.8% in April, the General Administration of Customs said. China’s trade surplus widened sharply to $35.9bn, last month, from April’s $18.5bn, the customs office also said.

“We do not think the May trade data will change the policy stance significantly,” Louis Kuijs, an RBS economist in Hong Kong, said in a note.

“While the export data is reasonably positive, the weakness of domestic demand implied by the import data may keep the pressure up for initiatives to support growth.”

Last month, a senior commerce ministry official suggested China could miss its target for trade growth for a third consecutive year in 2014 as higher labour costs and weaker global demand hurt what had been one of the economy’s main engines. The government has unveiled some policy support for the export sector, including giving more tax breaks, credit insurance and currency hedging options to its exporters.

-Reuters