Chinese trade falls, but imports hold up as domestic demand looks robust
Official figures out this morning have allayed concerns that the Chinese economy is heading for a bumpy landing.
Trade data showed the world's second largest economy stretched its surplus – the difference between the value of exports and imports – to $50bn (£34bn) in May, up from $47bn one month earlier.
Both the value of goods and services sold abroad and bought from overseas dropped, though imports held up much better than expected as advanced economies that rely on Chinese demand breathed a small sigh of relief.
Exports fell by 4.1 per cent in May, in dollar-denominated terms, while imports contracted by just 0.4 per cent, compared to predictions they could shrink by up to six per cent.
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The People's Bank of China (PBOC), the central bank, held its forecast for economic growth at 6.8 per cent for this year.
Clair Huang of Societe Generale said: "China's trade report overall indicates firmer domestic demand. Imports from Europe and Australia strengthened a lot."
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On the back of signs that Chinese consumers and firms remain happy to open their cheque books, the PBOC upgraded its expectations for inflation. It now expects the consumer prices index to run at 2.4 per cent this year, up from 1.7 per cent in its previous prediction.
Fears that the economy will remain unbalanced for some time could linger, nevertheless, as the central bank also said investment was still set to climb by 11 per cent this year.