Mainland trade expands more than forecast
China trade jumped more than expected last month but economists warn that the worst is not yet over, predicting more volatility because of the sovereign debt crisis in Europe, the mainland's largest export market.
Overseas shipments soared 48.5 per cent to US$131.76 billion, beating economists' consensus of 32 per cent growth.
Imports rose 48.3 per cent to US$112.23 billion, exceeding their consensus of 44.7 per cent growth. This left the surplus 45.5 per cent higher at US$19.5 billion.
Economists and exporters said the global economic recovery had helped power Chinese exports, but the mainland faced a threat from the European debt crisis.
'The good news of the trade figures is that it cools the market's debate of a possible economic hard landing in China, but the bad news is the adverse impact of the European debt problem and the weakening euro has yet to surface,' Barclays Capital Asia economist Peng Wensheng said yesterday. 'It may take three to four months to show the real impact on China's exports.'
The European Union remained the largest consumer of Chinese exports, accounting for about 20 per cent of China's exports in the first five months of this year. Exports to the EU leapt 49.7 per cent last month year on year, compared with 28.5 per cent growth in April.
Shipments to the US, China's second-largest export destination, recorded 44.3 per cent growth, compared with 19.1 per cent in April, despite Washington's relentless pressure on Beijing to lift the yuan.
Some economists said China was lowering its exposure to the EU by diversifying its markets. For example, exports to the Association of Southeast Asian Nations increased 48 per cent last month, compared with a 42.6 per cent rise in April, and Asean replaced Japan as the third-largest trading partner of China last month.
Federation of Hong Kong Industries deputy chairman Stanley Lau Chin-ho said the European debt crisis created uncertainty over consumption desire and cast a shadow on buyers' confidence in Europe.
'Last year, we exporters were worrying about orders. This year, we are worrying about labour problems,' Lau said.
He said that labour unrest in the manufacturing hubs of the Pearl River and the Yangtze River deltas, sharp rises in minimum wages and labour shortages complicated an already challenging export landscape.
Peng forecast the European debt crisis could offset some strong growth in mainland exports in the past few months and left the full-year growth at 18 per cent.