Business

China trade healthier than expected

Chinese workers packaging aluminium tapes at an aluminium production plant in Huaibei, east China's Anhui province Image copyright Getty Images

China's exports and imports rose by more than forecast in May, indicating that economic growth remains resilient amid concerns about a slowdown.

Exports rose by 8.7% from a year ago in US dollar terms, beating estimates of 7%, after strong demand from Europe.

Imports shot up by 14.8%, compared with estimates of 8.5%, thanks to purchases of processing and assembly products.

Overall, China's trade surplus widened to $40.8bn (£31.5bn) from $38bn in April.

Data released on Thursday also showed China's foreign exchange reserves rose by more than expected in May as tougher capital restrictions took effect.

However, many analysts warn that China's growth is likely to slow gradually in coming quarters.

"Today's trade data surprised on the upside, but has not changed our overall view that real GDP growth likely peaked in the first quarter," investment bank Nomura said in a report.

Growth risks

Moody's Investors Service downgraded China's credit rating last month on concerns that its financial strength would be eroded in the coming years by rising debts.

Much of China's growth since the financial crisis has come from massive government-led stimulus spending on infrastructure.

But the rise of zombie factories and ghost cities, an increase in capital outflows and the collapse in commodity prices seem finally to be taking their toll.

China's government has been forced to take steps to cool the property market and clamp down on speculative market activity.

Investors are also worried about China's potential economic tensions with the US, its biggest trading partner after the European Union.

Before entering the White House, US President Donald Trump pledged to shrink the country's gap with China.

Following a meeting in April with Chinese President Xi Jinping in Florida, the two sides have agreed to 100 days of trade talks which have borne some fruit.

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