China's May trade data beat gloomy market expectations, figures from the customs administration showed on Sunday, with crude oil imports surging and U.S. demand for Chinese exports offsetting lackluster shipments to Europe.
Analysts said it was too early to declare the Chinese economy out of the woods after a weak showing in industrial activity on Saturday, which was foreshadowed by an interest rate cut two days earlier.
Exports rose 15.3 percent in May from a year earlier, a much stronger rate than market expectations of a 6.8 percent increase, and up from April's rise of 4.9 percent.
Annual growth of 12.7 percent in imports last month also exceeded expectations of a 5.0 percent increase in a Reuters poll, and were well above the 0.3 percent annual rise in April.
Both exports and imports hit record highs in value terms. China's trade surplus reached $18.7 billion in May, compared with a forecast of $16.2 billion. China booked a surplus of $18.4 billion in April.
"Trade is a bright spot in the weekend data," said Wang Jun, of government-backed think tank CCIEE. "Monetary policy should continue to lean towards loosening."
Trade with the U.S. rose 12 percent in the first five months of this year, compared with a mere 1.3 percent rise in trade with Europe. The drag from European woes has hit China even as it is struggling with a deeper-than-expected slowing as a result of controls on the real estate sector, which are feeding into the broader economy.
Chinese manufacturers face a double whammy of slackening global and domestic demand, as well as rising labor and raw materials costs.
Despite May's boost, export growth is still well under the annual growth of more than 20 percent seen in 2010.
Data released on Saturday showed fixed asset investment near its lowest level in a decade and industrial output near its lowest in three years, albeit slightly improved from April.
But some in China seem to be anticipating a recovery following government stimulus measures announced too late to impact May data. Copper imports—normally an indicator of economic activity—were surprisingly strong and crude oil imports hit an all-time high of 6 billion barrels a day.
Domestically, the central government has speeded up approval of some projects and cut interest rates for the first time since 2008, but remains reluctant to open the taps to property developers or risk raising debt levels with another full-throttle stimulus.
Annual economic growth is widely expected to dip below 8 percent in the second quarter, a sixth consecutive quarter of slowdown.
China's central bank appears to be tolerating a weaker yuan in order to help local exporters.
It allowed the yuan to post a historical record monthly decline against the dollar in May, guiding the official midpoint CNY
SAEC down 1.1 percent over the course of the month.
However, the decline was significantly less compared with other currencies, leading some analysts to suspect the yuan is being positioned to truly trade against a basket of currencies after decades of being priced against the dollar.
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