What China’s Export Surge Really Means

From theForbes blog:

On Thursday China announced that its exports in May surged 48.5% compared to the same month last year. Imports into China rose by nearly the same percentage, 48.3%, but overall, China’s trade surplus for the month spiked to a historically strong US$20 billion.

Stock markets in Shanghai and Shenzhen rallied 3% on the news, after a disappointing past two weeks, taking it as a sign that China’s economic recovery is solidly on track. Stocks on U.S. markets also rose sharply this morning in response to the news.

So what do these latest trade figures actually mean, and are they really the good news markets think?

For Chinese companies selling abroad, it definitely is good news. Chinese exporters were hard hit by the fall-off in foreign demand last year that followed from the global financial crisis. Total exports dropped 16% in 2009, compared to 2008, a loss of over US$ 200 billion in business. In some months last year, exports were down by as much as 26%. For the past couple of months, starting in December, China has reported exports growing by an average of 26%, year-on-year.


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