Import growth narrows May trade surplus

By Ding Qingfen (China Daily)
Updated: 2011-06-11 09:17
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BEIJING - China's trade surplus for May narrowed by 33 percent from a year earlier to $13.1 billion, as exports slowed and import growth quickened, according to the General Administration of Customs.

China's imports of iron ore, crude oil and soybean registered rapid growth last month, indicating that domestic demand has not slowed as expected and the nation is not facing a hard landing at the moment, said economists.

Customs announced on Friday that China's trade surplus reached $13.05 billion, compared to $19.5 billion in May 2010 and $11.4 billion in April.

Long Guoqiang, senior researcher with the Development Research Center of the State Council, said higher growth of imports than exports led to the narrowing surplus.

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"While the world economic recovery is in limbo and weak, China's outbound shipment performance in May is fairly good. More importantly, the nation's demand for commodities is stronger than expected," he said.

China's year-on-year import growth in May accelerated to 28.4 percent from April's 21.8 percent, while the nation's export growth slowed to 19.4 percent from 29.9 percent in April, according to Customs.

In May, China's soybean imports rose for a third month, with inbound shipments reaching 4.56 million metric tons from 3.88 million tons in April.

China's crude oil imports were up 69.5 percent year-on-year in value terms versus 20.8 percent in volume terms, and refined oil products up by 47.4 percent versus 6.6 percent.

"China will probably see a soft landing this year thanks to strong domestic demand," said Wang Tao, head of China Economic Research under the UBS Securities.

Clyde Russell, market analyst from Reuters, agreed.

"Those looking for evidence of a hard landing for China's economy won't have found it in the May trade data, with imports for oil remaining elevated, coal and iron ore gaining and soybeans jumping," Russell said.

The World Bank predicted recently that China's economic growth will remain high at 9.3 percent this year, before slowing to 8.7 percent in 2012.

While imports from Japan remained weak at 7.8 percent, coming after 4.6 percent growth in April, imports from other developed nations accelerated. Imports from the United States and European Union rose by 35 and 35.1 percent in May, from 21.9 and 28.5 percent in April.

Surplus remains high

So far this year, China's trade surplus has decreased by 35.1 percent to $22.9 billion, with exports rising by 25.5 percent to $712.3 billion and imports up by 29.4 percent to $689.4 billion.

"We expect both export and import growth to slow down in the rest of the year," said Wang.

However, the monthly trade surplus will remain relatively high, she said.

As the nation's inflation rate remained at about 5 percent during the first four months of this year, the Chinese government has taken steps including raising the interest rate and required reserve ratio to cool the economy and to curb the bubbles in the property market. The moves are believed to have decreased the demand for commodities.

Sources said a forum aiming to expand imports will be held this month, and some relative measures will be taken later.

"Efforts on stimulating imports cannot take off until the end of this year," said Zhou Shijian, senior trade expert from Tsinghua University.

China's exports to developed regions decelerated in May. Outbound shipments to the US increased by a modest 7.2 percent year-on-year, compared with growth of 25 percent in April. For the EU, the nation's exports gained by 13.2 percent, less than half of the rate recorded in April.

But experts said export growth will remain comparatively stable in the months ahead considering the coming new wave of orders from overseas for the Christmas holiday.