China’s trade data release over the weekend lifted market sentiment as the world’s second largest economy reported a bigger trade surplus for the month of May, totalling US$18.7 billion. This is higher than April’s US$18.4 billion.
The data offered a glimmer of hope for the global economy since Chinese export performance is an important gauge for the health of the world economy.
The trade report showed exports from China are up 15.3 per cent in May from a year earlier, topping April’s 4.9 per cent pace and also above forecast. Meanwhile, imports rose 12.7 per cent in May, also easily surpassing April’s 0.3 per cent increase and above forecasts.
Shipments to Europe did fall due to the euro zone debt crisis slowing euro zone business activity but exports to the United States rose 12 percent, helping making up for loss to Europe.
The data comes after news on Friday that the central bank of China, (People’s Bank of China) cut interest rates by 25 basis points in order to stimulate slowing growth in the Chinese economy. This was the first rate cut since 2008 and raised concern in markets on Friday that upcoming data over the weekend would have been weaker. Indeed other economic data on inflation and production and retail sales were on the weak side but not as weak as expected. The stronger trade data helped make up for the other mixed data.