Export Rise More Than Forecast, Imports Slow, But Commodity Volumes Hold Up

China May trade figures were mixed. Export growth improved more than forecast, printing at +7.6% y/y, versus 5.7% forecast and 1.5% in April. Imports were weaker than forecast though at +1.8%y/y, versus 4.3% forecast and 8.4% in April. This aided a better than expected trade surplus at $82.62bn ($72.15bn was the forecast).

• The export bounce is generally consistent with trends with other North East Asia economies. It should be also source of support for growth in the near term.
• The chart below plots export growth against the CNY NEER (in y/y terms). A better export picture is not inconsistent with firmer NEER levels, although much focus for USD/CNY remains in terms of domestic capital outflow pressures.
• Processing exports were down -1.2% y/y, but other details showed an improved y/y trend.
• Looking forward, base effects remain favorable for y/y momentum in the next few months. Trade tensions are in focus though (with both the US and EU,) and will likely remain so as we get closer to the US November election. China's trade surplus with the US rose to $30.8bn, but we remain below 2023 highs.

Fig 1: China Export Growth Versus CNY NEER Y/Y

Source: MNI- Market News/Bloomberg

• On the import side, the headline miss suggests at face value some domestic demand pressure. Still, commodity import volumes held up quite well in m/m terms. Crude oil rose +5%, while iron ore was up a touch. Natural gas import volumes were also stronger.
• Coal imports fell in the month but are still up 12.6% y/y ytd. Hence, we remain elevated from a levels standpoint.
• The second chart below overlays China imports y/y against the Bloomberg spot commodity index.

Fig 2: China Import Growth Versus Commodity Prices Y/Y

Source: MNI - Market News/Bloomberg