Economy

China exports surge but Europe debt crisis looms

(Agencies)
Updated: 2010-06-10 14:19

A worker rides past piles of containers at a port in Yingkou, Liaoning province June 10, 2010. China's exports rose 48.5 percent in May from a year earlier and imports were up 48.3 percent, the General Administration of Customs said on Thursday. [Agencies]

BEIJING - China's exports surged by nearly 50 percent in May but analysts warned Europe's debt crisis is likely to hurt the recovery in trade.

Exports rose 48.5 percent in May, while imports were up 48.3 percent, the Chinese customs agency said Thursday. The figures exceeded most analysts' forecasts and produced a monthly trade surplus of $19.5 billion.

"It's certainly encouraging. But there's always room for skepticism given the tepid recovery in global demand," said Royal Bank of Scotland economist Ben Simpfendorfer. "We may yet see a pullback in exports."

China's strong trade figures might rekindle pressure from Washington and other governments for Beijing to let its currency rise. The yuan has been frozen against the dollar since late 2008 to help China's exporters compete amid weak global demand but its trading partners say that is distorting trade.

Analysts expect the yuan to rise this year but say China's leaders will act only once it is clear global demand has recovered.

The 27-nation European Union is China's biggest trading partner and Beijing is closely following its debt problems, which are expected to hurt consumer spending.

Demand for China's exports plunged after the global crisis hit in 2008, forcing thousands of factories that made shoes, toys and other low-cost goods to close and throwing millions of migrant laborers out of work.

Exports have rebounded at least temporarily to pre-crisis levels, hitting $131.7 billion in May, up from $120.5 billion in the same month two years ago.

The May export surge might be a one-time spike as manufacturers rushed to ship goods ahead of the expected rise of the yuan, which would boost prices abroad, said Zhu Jianfang, chief macro analyst for Citic Securities in Beijing.

"We think May and June will be the high point of our trade this year," Zhu said. "We expect trade to slow in coming months."

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Exports to Europe were up 34.4 percent in May from a year earlier while those to the United States rose 24.8 percent. China's trade surplus with the United States was $16.7 billion.

Exports to some developing markets rose much faster, reflecting the uneven recovery of global demand. Shipments of Chinese goods to Indonesia jumped 61 percent and to Russia by 53.8 percent.

Import growth also slowed from its April level of 49.7 percent, which analysts said reflected weaker demand for foreign iron ore and other raw materials. The government is trying to cool a boom in the real estate industry, which is one of China's top customers for steel, copper and other building materials.