May’s record trade surplus strengthens the case for yuan appreciation despite recent policy measures to curb currency strength.
China’s trade surplus widened to $105.43bn in May, up from $84.82bn in April, as exports surged 19.4% year-on-year. The increase was driven by AI-related equipment, with computer and parts shipments rising 66% and integrated circuit sales more than doubling.
The surplus exceeds forecasts and reinforces the yuan’s position as Asia’s top-performing currency, though bullish momentum has stalled. Authorities are balancing targeted monetary easing with tighter capital controls to manage appreciation pressures.
Regulators are encouraging offshore retention of export proceeds by allowing banks to offer USD deposit rates above SOFR. Simultaneously, enforcement on cross-border flows has intensified, including crackdowns on illegal offshore trading and stricter oversight of unlicensed brokers.