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May's Surprise Trade Figures
Summary:A closer look at the surprise jump in China's trade figures in May.

By Zhang Bin (张斌)
News, page 5
Issue No. 574
June 18, 2012
Translated by Zhu Na
Original article:

In May, China's trade figures rebounded with growth in imports and exports, though market analysts were expecting a pick-up in growth rates, the size of the increase exceed market expectations.

The total value of China's exports in May was $181 billion, an increase of 15.3 percent. The country imported goods worth $162 billion in the same month, an increase of 12.7 percent. The rate of import and export growth increased by more than 10 percentage points compared to April.

The amount of international trade conducted in Guangdong province, traditionally the Chinese province with the largest exposure to foreign trade, hit a historic monthly high in May.

In the face of this sudden spurt in trade growth, Zheng Jianrong (郑建荣), vice director at the Bureau of Foreign Trade and Economic Cooperation in Guangdong Province, said "The trade figures for May really did surprise us, we are also waiting for more detailed data to ascertain the reasons for the surprise growth and to assess whether it's sustainabile."

Zheng noted that he "felt that short-term factors played a large role, perhaps it's related to summer consumption in the U.S.."

"No-one expected it," Liu Weiming (刘维明), an international financial market expert at CITIC Bank, told the EO.

The rate of growth in exports in May has already reached the upper limit of market expectations, prior to the release of the data, the average estimate among market participants was for growth of 7.1 percent.

Lu Huamao (卢华茂), an foreign trade official in Wenzhou said "It's hard to say why the data in May suddenly rebounded."

From Jan to April, Wenzhou's exports grew at a rate of 1.2 percent, but in May, the rate increased to 3.1 percent.  

"Although the turn around in the growth rate was not as dramatic as what took place on the national level, it still seems a little odd," said Lu.

In the face of doubts, experts rushed to find plausible explanations, Liu said "I feel that seasonal factors played a part. On the one hand, orders which had built up before now were all delivered over the same period and secondly, two of the public holidays for Labor Day fell in April this year, which helped to make the May data look stronger."

An official from the Ministry of Commerce agreed on this explanation and offered a more detailed analysis.

This official said, there were two main reasons for the rebound in exports: one is the seasonal factors, the delivery period for new orders always peaks in May, June and July and then again in Spetember and October. The other point has to do with the "extra two days" due to the May Labor Holidays being observed in April this year.

"You shouldn't underestimate the impact of these two extra days, normally there are only 22 working days in a month, so two extra days means an extra ten percent."

To further emphasise his point, this same official noted that in May 2012, the total value of China's foreign trade was $343.6 billion, an increase of 14.1 percent year-on-year.

"If we take ten percent off this figure, it would reduce the amount to about $300 billion. But if we look back to 2011, total trade came in at just over $301 billion, so if we make an adjustment for those two extra days, it appears as if there was not much growth on last years trade figures after all.

Experts also pointed out another major factor; some industries such as the photovoltaic industry, which produces solar panels, speeded up the delivery schedule of their orders in an attempt to avoid the impact of U.S. tariffs that are set to take effect soon, this helped contribute to an increase in the amount of total exports.

But some analysts also say that the record data for May might also be a little inaccurate.

"The data for May contains a lot of one-offs, and isn't enough to help us judge the outlook for the foreign trade, especially in relation to the European figures, which will be hard to maintain," the Ministry of Commerce official mentioned above said.

The data shows that from January to April 2012, China's exports to Europe fell by 2 percent, 8.9 percentage points lower than China's overall export growth.

China's exports to Europe make up about 20 percent of all the country's exports. In May, although, the rate of growth in exports to Europe was quicker than the previous month, it still declined by 2.76 percent.

"I am afraid it is hard to reach the annual target of 10 percent growth in foreign trade," the official from the Ministry of Commerce said.

According to data from China's customs agency, the total value of trade conducted from January to May this year was $1.5 trillion, an increase of 7.7 percent over the same period last year.

"This means that for the next few months the growth rate will need to exceed 10 percent, if we are to achieve our goal," said the Ministry of Commerce official.

"I did some rough calculations based on the monthly trade data for last year, and if we want to reach this target, over the next few months, total trade will need to reach about $360 billion a month. I personally don't think its possible."

Most people interviewed by the Economic Observer believe that China's foreign trade will continue to come under a lot of pressure.

Huo Jianguo (霍建国), vice president of a research institute under the Ministry of Commerce, told the EO that China's major export provinces - places like Guangdong, Jiangsu, Zhejiang and Shanghai - are currently all still under a lot of pressure and export growth in these regions remains below the national average.

This article was edited by Paul Pennay


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