China's trade surplus expanded significantly in May, reaching USD 105.4 billion, up from USD 84.82 billion in April, according to Societe Generale. This increase was primarily driven by a 19.4% year-on-year rise in exports, with AI-related equipment playing a key role. Specifically, outbound shipments of computers and parts surged by 66%, while sales of integrated circuits abroad more than doubled, highlighting the impact of technology exports on the trade balance [1].
Societe Generale notes that this robust trade data supports the case for Chinese Yuan (CNY) appreciation. However, the recent bullish momentum in the currency has stalled, as authorities implement a mix of targeted easing, tighter capital controls, and measures to encourage offshore retention of export proceeds. The CNY remains the best-performing currency in Asia, acting as a regional anchor and safe haven, with market participants closely monitoring daily PBoC fixings for policy signals [1].
Regulators are reportedly nudging banks to step up USD deposit mobilisation, allowing rates above SOFR, in an effort to encourage corporates to retain export proceeds offshore and counteract yuan strength without direct intervention. Concurrently, enforcement on cross-border flows is tightening, with renewed crackdowns on illegal offshore trading, stricter oversight of unlicensed brokers, and forced closure of non-compliant accounts, all pointing to a clear bias toward capital retention [1].
CONCLUSION
China's stronger-than-expected trade surplus and surging AI-driven exports are supporting the yuan, though authorities are taking steps to moderate appreciation and retain capital. The combination of regulatory tightening and targeted policy measures suggests a cautious approach to currency management amid robust export performance.