China exports blast past market forecast - sources

A man stands in front of containers at Tianjin Port in Tianjin municipality March 11, 2009.

SHANGHAI/BEIJING (Reuters) - Chinese exports in May grew about 50 percent from a year earlier, sources said on Wednesday, a figure that blew past expectations and fuelled a rise in stock markets globally.

The key Chinese stock index, which had been in negative territory, jumped 2.8 percent as the strong export growth reassured investors who have been worried that the European debt crisis would weigh on the global economy.

Exports, which are scheduled to be reported as part of broader trade data on Thursday, had been expected to rise 32.0 percent year-on-year in May after recording a 30.5 percent pace in April.

If confirmed, the surge in external demand would suggest that the risk of a Chinese economic downturn is very small, said Huang Lin, an economist with Soochow Securities in Beijing.

"The risk of double-dip (in the world economy) is not as big as many have feared and China's economic growth this year will be above 9 percent," she said.

European shares extended initial gains, most Asian stock markets clawed back the day's losses, the euro edged up and oil also gained after Reuters reported the export numbers.

The surprisingly strong exports came alongside figures showing that the domestic economy was performing in line with relatively strong expectations, three sources said.

Chinese consumer prices in May rose 3.1 percent from a year earlier, accelerating from 2.8 percent in April, a senior government official told an investors' conference on Wednesday that was closed to media, according to the sources present at the meeting.

The official also told the audience that new loans in May reached 630 billion yuan ($92.2 billion), falling from 774 billion yuan in April.

MEETING FORECASTS

"The official unveiled those figures during the meeting, but they're basically in line with our forecasts," one of the sources said, speaking on the condition of anonymity because of the sensitivity of publicly discussing data before it is officially released.

Economists polled by Reuters expect annual CPI inflation to reach 3.0 percent in May, new loans to stand at 600 billion yuan and export growth to be around 32 percent.

Consumer inflation and other activity data are due on Friday. Money and lending figures could be published by the central bank at any time.

Chinese economic indicators are often circulated widely in markets and government circles ahead of their official release, and are sometimes subject to last-minute revisions.

The deepening of the European debt crisis has become a major concern in China, where the government and investors had hoped that a decent recovery in external demand would make up for the gradual withdrawal of stimulus measures at home.

Growth of exports to Europe, China's largest trade partner, could drop by as much as 7 percentage points in May, June and the third quarter, Huo Jianguo, a senior commerce ministry researcher, said last month.

But other analysts have said that these worries were overblown, at least for now.

Huang of Soochow Securities noted that while shipments to the European Union account for about one fifth of total Chinese exports, those going to debt-troubled countries are a much smaller share.

"China's exports are expected to remain strong in the second half of this year," she said.

(Reporting by Beijing and Shanghai Newsrooms; Writing by Jason Subler and Simon Rabinovitch; Editing by Kazunori Takada)

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