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Finance & Economy

China’s exports gain steam but imports fall, signalling weaker domestic demand


A shipping container is lifted by a crane at a port in Lianyungang, Jiangsu province

A shipping container is lifted by a crane at a port in Lianyungang, Jiangsu province

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

Exports rose 7 percent in May from a year earlier, quickening from April’s 0.9 percent rise, while imports fell 1.6 percent, versus a rise of 0.8 percent in April, the General Administration of Customs said.

China’s trade surplus widened sharply to $35.9 billion in May from April’s $18.5 billion, the customs office said.

That compared with market expectations in a Reuters poll of a 6.6 percent rise in exports, a 6.1 percent rise in imports and a monthly trade surplus of $22.6 billion.

“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,” he said.

China’s commerce ministry had predicted that the trade picture could brighten in May as base efforts fade and government support measures kick in. Analysts have attributed the weak trade figures partly to an inflated comparison base with last year due to a rash of fake invoicing of exports to beat currency restrictions. Authorities have cracked down on such activities since May of last year. “The data shows that the country’s exports growth has returned to a normal level and will continue to improve,” customs office spokesman Zheng Yuesheng told state television.

Exports to the United States rose 6.3 percent in May, slowing from a rise of 12 percent in April, while shipments to the European Union rose 13.4 percent last month, compared with 15.1 percent in April. Exports to ASEAN countries rose 9.1 percent, quickening from 3.8 percent in April, the data showed.

TRADE TARGET IN DOUBT

The pick-up in exports follows a batch of factory surveys for May that showed improvement in activity, as the government steps up targeted measures to support growth, including quickening construction of railways and public housing and loosening credit conditions for selected banks.

The government has also unveiled some policy support for the export sector, including giving more tax breaks, credit insurance and currency hedging options to its exporters.

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 labor costs and weaker global demand hurt what had been one of the economy’s main engines.

China’s combined exports and imports edged up 0.2 percent in the first five months from a year earlier, trailing far behind the annual growth target of 7.5 percent.

Analysts believe that China’s property market could put downward pressure on growth even as global demand improves, as evidence mounts of a rapid cooling in what had been one of the few strong spots in the economy.

The government is due to release inflation data on Tuesday, and industrial output, retail sales and fixed-asset investment on Friday. New loan and money supply data will be issued between June 10-15.

A Reuters poll found analysts expect annual economic growth to slow to 7.3 percent in the second quarter from 7.4 percent in the previous quarter, with full-year growth of 7.3 percent in 2014, the weakest in 24 years and below the government target of 7.5 percent.

Premier Li Keqiang said on Friday the economy still faces relatively big downward pressures and pledged to continue to use targeted measures to support growth.

Source: Reuters “China’s May exports gain steam but imports fall unexpectedly”
 
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About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee

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