China Likely To Log Large Trade Surpluses This Year: Capital Economics

(RTTNews) - Healthy demand in external markets together with weak import growth will help China to post large trade surpluses this year, Julian Evans-Pritchard, a China economist at Capital Economics said in a note on Monday.

Data published by the General Administration of Customs over the weekend showed that exports growth accelerated to 7 percent on a yearly basis in May from 0.9 percent in April. Meanwhile, imports dipped 1.6 percent, following a 0.8 percent rise in the previous month.

The trade surplus increased significantly to $35.9 billion, the largest since 2009, from $18.5 billion in the previous month.

The economist said the cooling property sector is indeed weighing on commodity demand. May's weak headline import figure also reflects the ongoing crackdown on commodity financing.

At the same time, export growth continued its recovery as distortions caused by over-invoicing eased, Evans-Pritchard noted. Moreover, the export orders component of Markit's manufacturing Purchasing Managers' index is at its highest since 2010, pointing to a further pick-up in growth, the economist added.