China's merchandise trade surplus in US dollar terms was $103.22 billion in May, widening from $96.18 billion in April and well above the level of $82.62 billion recorded in May 2024. Exports rose 4.8 percent on the year in May after increasing 8.1 percent previously, while imports fell 3.4 percent after advancing 0.8 percent previously.

The increase in headline exports in May was recorded despite a sharp decline in exports to the United States. The value of Chinese exports to the United States in May was $28.8 billion, down 35 percent from $44 billion in May 2024, reflecting the impact of higher tariffs. This weakness, however, was offset by solid increases in exports to Europe and other Asian countries. The recent easing in trade tensions between China and the United States may drive a rebound in China's exports to the United States in June.

The China RPI and the RPI-P rose from minus 29 and minus 33 respectively to minus 21, indicating that recent Chinese data in sum are coming in below consensus forecasts.

The surplus is expected to widen to $100.8 billion in May from $96.1 billion in April. Imports are seen down 1.0 percent from a year ago compared with a 0.8 percent year-on-year rise in April while export growth is expected down to 6.0 percent from 8.1 percent in April.

The Merchandise Trade Balance is the difference in value between imported and exported goods. Data are denominated both in U.S. dollars and renminbi. A positive number indicates a surplus meaning that more goods were exported than imported.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they also affect currency values in foreign exchange markets. However, the foreign exchange impact is muted here given that the currency is pegged to a basket of currencies and its value is determined daily by the government.

China's growth stems from its exports to the industrialized world. And in turn, global growth is dependent upon Chinese growth, especially since the financial woes of 2008.

Merchandise trade statistics are compiled and published by Customs General Administration (CGA) on a monthly basis. Preliminary estimates are available about 13 days after the reference month with details available within 25 days. Since 1980, the compilation of Customs statistics follows the concepts and definitions of the International Merchandise Trade Statistics: Concepts and Definitions. Data are released for total imports and exports in the Chinese currency and the U.S. dollar. There are five main categories each for primary and manufactured goods. Detailed information is available by category, destination country, foreign enterprises and domestic region to name a few. Geographically, the data covers the customs territory of the mainland China and excludes Hong Kong, Macao and Taiwan.