Chinese Economy Expected to Show Stability in May

China’s economy is likely to have remained on a stable footing in May, buoyed by solid gains in trade and investment as economic ties with the United States take a positive turn and infrastructure spending cushions domestic growth.

A Reuters poll of indicators from trade and industrial output to loans and property investment, is expected to show that economic growth held up nicely into the second quarter, defying worries of a sharp slowdown. Beijing has curbed lending to avert bubbles and debt risks, but tougher regulations have raised concerns the measures could go too far and hurt growth.

Economists, however, said they felt reassured by positive signals from the top leaders of China and the United States that a trade war between the two economic power-houses was avoidable.

“We used to be worried about the negative impact of possible trade frictions on China’s exports to the United States, but now that fear has eased,” said Yan Ling, a Shenzhen-based analyst with China Merchant Securities.

“We now think it will be more about increasing U.S. imports to China.”

In sign of progress, China and the United States agreed in May to take action by mid-July to increase access for U.S. financial firms and expand trade in beef and chicken among other steps as part of Washington’s drive to cut its trade deficit with Beijing.

The value of Chinese exports was seen rising 7.0 percent in May from a year earlier, and imports by 8.5 percent, slower than April’s growth rates of 8.0 percent and 11.9 percent, respectively. But the pace is relatively positive given declines in commodity prices and bodes well for China’s trade outlook.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza