According to Reuters survey, China's import growth slowed in May, but export growth rose slightly from last month. The monthly surplus continued to maintain the pattern of favorable balance of trade, and the surplus was larger than in April.

The contraction of external demand caused by the eurozone sovereign debt crisis is still brewing, and domestic real estate regulation policies have had an impact on domestic demand, which can be seen from China's official purchasing managers index (PMI) in May. Its new order index has fallen more than the new export orders index. However, the obvious impact of the weakening demand on imports and exports will still need to be revealed for some time.

Li Keqiang, vice premier of the State Council, wrote recently that the foundation of the comprehensive recovery of the world economy is not solid. The impact of the international financial crisis has not yet been eliminated. The rise of various forms of protectionism may restrict China's efforts to maintain or even expand its external demand.

Market impact:

Strong exports will bring confidence to investors in the domestic market, believing that Chinese enterprises can remain vigour to ride out the European debt crisis.

If the growth rate of imports in May is strong, it will ease domestic and foreign concerns about China's slowing domestic demand, thereby supporting the recent commodity currencies such as Australian dollar and the international oil price and basic metal prices, which have been down sharply due to the Greek debt crisis.

The recent calls for the appreciation of the renminbi have eased the pressure on the Chinese government to reform the exchange rate system. But if the trade surplus is much higher than expected or once again aroused the dissatisfaction of the trading partners, it may lead to more trade frictions and repress the appreciation of the renminbi.