China's export growth slows down

Workers at a factory in China
Image caption Low-cost manufacturing has turned China in to the biggest exporter in the world.

The pace of growth of China's exports slowed down in May suggesting that demand in its key markets may be faltering.

Shipments from the mainland grew by 19.4% in May, compared with the same month last year, according to China's customs agency.

The number is a sharp decline from a 30% annual surge seen a month earlier.

Meanwhile, imports grew by 28.4%, resulting in a weaker-than-expected trade surplus of $13.1bn (£8bn).

Analysts had forecast a surplus of $18.6bn.

They said the surprisingly weak numbers suggest the global economic recovery still remains volatile.

"Looking at export figures, they grew at a slower clip last month, indicating there are still uncertainties hanging over the world recovery," said Chen Yong of Huatai Securities in Shanghai.

Ken Peng of Citigroup warned that growth in China's trade may slow down even further.

"I wouldn't be surprised if next month showed softer numbers," Mr Peng said.

Rebalancing trade

China's economic growth has been powered by a boom in its exports sector.

The country is the world's second largest economy and its biggest exporter.

However, as export demand from key markets like the US and Europe slows, China has instead been looking to boost domestic demand to sustain growth.

Analysts said that even though the export numbers for May were weak, the growth in imports has been encouraging.

"Imports were strong and on par with last month in terms of absolute value, which shows that China's domestic demand remains strong," said Xu Biao of China Merchants Bank.

"In past years, May imports were often smaller compared to April's," Mr Xu added.

The fact the imports grew despite the volatility in global commodity prices shows that domestic demand remains string, according to Dr Eliza Liu of CCB International.

"We expected imports to fall a bit deeper on falling global commodity prices and slowing investment in China," Dr Liu said.

"It turned out things were better than we thought."