Thursday, June 9, 2011

Strong Chinese imports growth eases fears over a rapid slowdown By Aaron Back and Stefanie Qi

China's trade surplus widened in May, but imports expanded significantly faster than economists had expected, alleviating somewhat concerns over a rapid slowdown in the world's second-largest economy.

                                                                                                                        Photo: Supplied
Containers are stacked at the Yangshan deep water port near Shanghai, China.

 China's strong demand for imports will likely be a welcome sign of strength in the Chinese economy.
 Weak readings in recent months on China's industrial production and from monthly manufacturer surveys have indicated economic growth momentum to be slowing, a key concern for global producers of commodities and raw materials that are imported by China.
 China's imports rose 28.4 per cent in May compared with the same month a year earlier, up sharply from the 21.8 per cent on-year rise in April, and above a median forecast increase of 22.0 per cent by 11 economists polled by Dow Jones Newswires.
 The rise in imports "shows domestic demand remains strong, and that the economy is not yet slowing at a pace that would be worrisome," said HSBC economist Ma Xiaoping.
 The surplus rose to $US13.05 billion ($12.3bn) from an $US11.4 billion surplus in April, but fell short of the polled economists' expectations of a median $US18.6bn surplus.
 Exports rose 19.4 per cent in May from a year earlier, down from April's 29.9 per cent on-year rise and slightly below expectations for a 20.4 per cent expansion.
 The slowdown in exports reflects a slowdown in economic growth in the US and other economies around the world, as well as temporary disruptions caused by the Japanese earthquake in March, Mr Ma said.
 On a sequential basis, imports in May fell slightly from a month earlier, declining 0.1 per cent from April, while exports rose 1.0 per cent, the Customs data showed.
 Earlier this week, World Bank economists said China should further tighten fiscal and monetary policy as continued inflation and asset bubble risk outweighed signs that economic growth was slowing.
 "What we are seeing now is a modest slowdown, and that's what the government and everybody has been targeting," said Ardo Hansson, lead economist at the World Bank's Beijing office. "So when we see it finally happening in a modest form, I think we should regard that as a positive development."

Additional reporting: Liu Li


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