China’s imports soared 28.4 % in May with strong demand for oil

Jun 11, 2011 12:00 AM

China posted a smaller-than-expected trade surplus in May of $ 13.1 bn because of soaring imports and weaker global demand growth. Sales to the US and the European Union slumped to their weakest since late 2009, excluding Lunar New Year holidays, underlining the view that the world economy is stumbling.
Nevertheless import figures suggest China's economy is expanding at a healthy pace with crude imports at elevated levels and coal volumes up by more than a fifth from both April and a year earlier.

Exports rose 19.4 % in May from a year earlier, slowing from the 29.9 % pace in April, while import growth accelerated to 28.4 % from 21.8 % in April, the customs agency said. The trade surplus rose from 11.4 bn in April.
Trade data for China is always closely watched because it is the world's biggest exporter and second-biggest economy. May's figures took on even greater significance as economists try to gauge whether a slowdown in the world economy is just a blip or the start of a more troubling slump.

With inflation running above target Beijing has taken steps to cool the economy. Economists are monitoring the economy to see whether those inflation-fighting efforts can help cool overheating areas such as property without smothering overall demand.
Exports to the US rose by a modest 7.2 % from a year ago, well off the 25 % growth pace in April. For the EU, exports rose 13.2 %, less than half the rate recorded in April.

Outside of the volatility caused by Lunar New Year holidays, both marked the weakest exports since November 2009, when the world economy was still feeling the aftermath of the global financial crisis.
Chinese factory activity expanded in May at the slowest pace in at least nine months, two purchasing managers' indexes showed earlier this month.

The data showed that crude imports topped 5 mm bpd for a fifth consecutive month, although analysts suspect some of the shipments are destined for storage as China builds up its emergency reserves.
It also indicated May coal arrivals rose 20.7 % from the month before, evidence of China's huge power demand. Power shortages have constrained growth, and utilities stepped up coal orders to prepare for summer demand.

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