China reported stronger-than-anticipated exports and imports for May despite falling commodity prices, suggesting the economy is holding up better than expected despite rising lending rates and a cooling property market.
Concerns over China landed squarely back on global investors’ radar after Moody’s Investors Service downgraded its credit rating last month, saying it expects the financial strength of the economy will erode in coming years as growth slows and debt continues to rise.
Imports have been strong in recent months, driven largely by iron ore and other commodities used to feed a year-long construction boom, while exports have rebounded thanks to stronger global demand after several years of contraction.
Still, analysts had expected trade growth to cool in May, forecasting the economy will gradually lose momentum over the rest of the year as measures to cool heated home prices dampen property investment and a crackdown on riskier types of lending pushes up financing costs.
But growth in both exports and imports defied those expectations and accelerated from April. China’s May exports rose 8.7 percent from a year earlier, while imports expanded 14.8 percent, official data showed on Thursday.
That left the country with a trade surplus of $40.81 billion for the month, the General Administration of Customs said.
Analysts polled by Reuters had expected May shipments from the world’s largest exporter to have risen 7.0 percent. Exports rose 8.0 percent on-year in April.
Imports were expected to have climbed 8.5 percent, after rising 11.9 percent in April.
Analysts were expecting China’s trade surplus to have widened to $46.32 billion in May from April’s $38.05 billion.
China’s trade surplus with the U.S. was $22.0 billion in May, up from $21.34 billion in April, according to data from China’s customs bureau.
The world’s two biggest economies have started their 100 days of trade talks, which was agreed by United States President Donald Trump and Chinese President Xi Jinping when they met in Florida in April in an effort to reduce the massive U.S trade deficit with Beijing.
In a sign of progress, the two countries agreed in May to take action by mid-July to increase access for U.S. financial firms and expanding trade in beef and chicken among other steps.
China does not deliberately pursue a trade surplus with the United States, vice commerce minister Yu Jianhua told a news conference on May 12.
China’s commerce minister Zhong Shan recently told new United States Trade Representative Robert Lighthizer the two sides should strengthen cooperation and manage disputes in trade, according to a statement on the website of China’s Ministry of Commerce.