China: Trade surplus stood at $49.98 bln - BBH

Research Team at BBH, notes that China's May trade surplus stood at $49.98 bln which is larger than April's $45.56 bln surplus but less than the median expectation of $55.7 bln).

Key Quotes

“Exports fell 4.1% year-over-year, which was a touch more than expected and follows a 1.8% decline in April.  Imports were more surprising.  They were off only 0.4%.  The market had been looking for a 4% fall after dropping 10.9% in April.

There are at least two important takeaways from the Chinese trade figures.  Imports have been contracting since October 2014.  The 0.4% decline is the smallest in more than a year and a half.  The news seems too good to believe.  Consider that imports from Hong Kong reportedly increased by $2.48 bln.  This is the most since 1999 and represents more than a 240% increase from a year ago. The suspicion is that this reflects over-invoicing to disguise capital exports. 

The other important takeaway is that China's steel exports rose 3.7% in May and in the first five months are running 6.4% above year ago levels.  The US and EU are already taking action to deter a further surge of Chinese steel imports.  China's surplus capacity is likely to be a source of tensions for years to come.”