Sterling vs US Dollar (FX:GBPUSD)
2 Months : From May 2019 to Jul 2019
China's exports grew unexpectedly in May as companies front-loaded ahead of US tariff hike, while imports declined more-than-expected signaling weak domestic activity.
Data from the General Administration of Customs on Monday showed that exports advanced 1.1 percent year-on-year in May confounding expectations for a decline of 3.9 percent.
On the other hand, imports decreased 8.5 percent annually compared to the expected drop of 3.5 percent.
As a result, overall trade balance showed a surplus of $41.65 billion in May, much bigger than the forecast of $22.3 billion.
Exports to the U.S. fell 4.2 percent from a year ago, while imports from the U.S. plunged 26.8 percent.
The US raised the tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent, on May 10. China retaliated by raising tariffs on $60 billion worth of imports from the US.
US President Donald Trump and China's Xi Jinping are set to meet at the G-20 summit in Japan later this month.
Marcel Thieliant, an economist at Capital Economics, said he expects all US imports from China to be subject to a 25 percent tariff by early next year.
China is mulling restrictions on rare earth exports, blacklisting US firms and discouraging Chinese citizens from visiting the US or studying there. The upshot is that the outlook for trade remains bleak, the economist noted.
The International Monetary Fund cut China's growth forecast for this year and next to 6.2 percent and 6 percent, respectively, citing downside risks and high uncertainty surrounding trade tensions, and said more policy easing may be needed if the conflict escalates.
In yuan terms, overall China's exports rose 7.7 percent in May, while imports slid 2.5 percent annually, the customs administration reported. Exports were forecast to grow 4.7 percent and imports to rise 5.8 percent.
Data from the People's Bank of China showed that China's foreign exchange reserves increased by $6 billion to $3.101 trillion in May after falling a month ago. Economists had forecast reserves to fall to $3.09 trillion.
Gold reserves were valued at $79.83 billion at the end of May compared to $78.35 billion in the previous month.
Gold reserves of China increased for a sixth month in a row in May.
The State Administration of Foreign Exchange said sound economic fundamentals will support smooth functioning of China's foreign exchange market.