China’s export growth in U.S. dollar terms declined 4.1% year-on-year in May, compared to -1.8% in April, largely in line with market expectations.
Imports growth in U.S. dollar terms picked up to a slight decrease of 0.4% year-on-year from -10.9% in April, much stronger than expected.
The export numbers provide little indication of external demand gaining traction. The positive growth in ordinary import growth – the first positive growth since June 2014 – suggests an improvement in domestic demand and is a reflection of rising commodity prices.
As a result, the trade surplus widened to US$50 billion in May, up from US$45.5 billion in April.
"The trade data released today…suggests production likely ticked down in May, while the demand side may be more resilient than we expect," says a research note by Nomura.
Notably, exports in RMB terms were up 1.2% year-on-year in May, and imports grew 5.1% year-on-year in RMB terms.
The onshore RMB depreciated by about 6.8% year-on-year on average in May, compared with 5.6% in April. The difference nudged the growth numbers in RMB terms.
If the RMB exchange rate against U.S. dollars remains mild throughout the remainder of the year, the difference between RMB and U.S. dollar -denominated growth figures should gradually shrink, says another report by ANZ AG.