Aussie investors lukewarm on Chinese trade boost

Reuters

The domestic benchmark extended gains to 0.2 per cent on the China data and a rebound in iron ore futures, before dropping into the red again and closing up 9.4 points, or 0.17 per cent, at 5676.6 as caution prevailed ahead of Britain's election today and the European Central Bank policy announcement.

With this, the country was left with a trade surplus of about $40.81 billion for May, the Chinese government agency General Administration of Customs of China on Thursday said.

China's trade growth rebounded in May in a positive sign for global demand and the cooling Chinese economy.

But the Australia and New Zealand Banking Group pointed out that the trend of a stronger yuan and volatility in commodity prices may complicate China's import outlook in the near term.

Import growth also impressed, rising 14.8% from the levels of a year earlier.

The economy still has strong momentum, with major export destinations such as the USA and Europe "operating in a steady way", said Yao Shaohua, an economist at ABCI Securities Co.in Hong Kong, who had the most accurate imports forecast.

Analysts were expecting China's trade surplus to have widened to $46.32 billion in May from April's $38.05 billion.

Spot iron ore dropped one per cent to $US55.43 a tonne, while Singapore futures reversed a 1.5 per cent opening fall to trade flat.

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

Exports rose by 8.7 percent to $191 billion (169.6 billion euros) in the month under review.

Much of the building boom has been fueled by government spending on road and rail projects and a frenzied housing market, even as authorities try to contain mounting risks from years of debt-fueled stimulus.

Trade with the United States, the 10-member Association of Southeast Asians and Japan surged 21.1 percent, 23.2 percent and 17.5 percent, respectively.

Yu Jianhua, China's Vice Commerce Minister, in a news conference in May, said, "China does not deliberately pursue a trade surplus with the U.S.".

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