China's exports jumped in May, reassuring investors about the economy's strength but putting pressure on U.S. President Barack Obama to placate critics who say Beijing is keeping the yuan unfairly undervalued.

Imports also grew robustly, testifying to the underlying momentum of the world's third-largest economy despite government steps to cool the red-hot property market.

Some economists said the export surge would be short-lived given debt problems in Europe, the country's biggest overseas market, but several said it would revive a debate about the timing of a long-awaited resumption in the appreciation of the Chinese currency.

It will support those who argue for a change in the policy, to the extent that it reduces near-term uncertainty about exports, said Wensheng Peng, an economist at Barclays Capital in Hong Kong.

The numbers were not a surprise after sources told Reuters a day earlier that exports had grown about 50 percent from a year ago. The news gave a boost to financial markets worldwide as investors expressed relief that global demand was holding up better than many had feared.

But Peng said the debate in Beijing was more about introducing greater flexibility to the currency than pushing up its value. As such, any climb would be moderate and gradual.

Reform will be more about increasing two-way variations in the exchange rate, he said.

Offshore yuan forward markets seemed to agree. At mid-morning, they were pricing in a rise of just 0.5 percent against the dollar in the next year.

China's total exports rose 48.5 percent in May from a year earlier and imports were up 48.3 percent, the General Administration of Customs said on Thursday, giving China a trade surplus of $19.5 billion, up from just $1.7 billion in April

The median forecast of 32 economists polled by Reuters was for exports to rise 32 percent and imports to climb 45 percent, with a projected trade surplus of $8.8 billion.

For the time being, at least, Chinese exports to Europe registered no impact whatsoever from the continent's debt crisis. On the contrary, exports to the European Union soared to a 49.7 percent year-on-year increase from a 28.5 percent path in April.

FORGET A DOUBLE-DIP

The export figures were much stronger than the market had expected and can ease fears about an economic double-dip, said Xie Xuecheng, senior economist with Southwest Securities in Beijing.

However, we should not be overly optimistic about the export sector in the coming months because the crisis in Europe has not ended and cost pressures on exporters remain high, he added.

Wages are surging in the export heartlands of southern China, dramatized by a wave of strikes to press for higher pay and an offer by contract electronics manufacturer Foxconn to almost double the wages of some workers after a string of suicides.

Figures also showed strong upward pressure on property prices, which rose 12.4 percent in the year to May, just shy of a record 12.8 percent increase in the year to April.

Despite double-digit economic growth, Beijing's crackdown on property speculation and worries about a wave of capital raising by banks have left Shanghai's stock market <.SSEC> one of the world's worst performers this year, down more than 20 percent.

WASHINGTON ON WARPATH

Some economists suspected that overseas buyers of Chinese goods might have brought forward their purchases to beat an expected resumption of the yuan's rise, something that had been feverishly anticipated in April and early May.

Exports rose 9.9 percent from April. After calendar adjustments for the number of working days, the increase was 10.9 percent, Customs said. By contrast, imports fell month on month.

Looking through the distortions in the data, Ting Lu, an economist with Bank of America Merrill Lynch, said in a report that year-on-year export growth could soon be slumping.

Because Europe's debt crisis has sent the euro tumbling, speculation has recently cooled that the yuan will resume its rise after having been frozen since July 2008 to help exporters weather the global credit crunch.

The yuan is tied to the dollar and that has led to a sharp rise in its all-important trade-weighted index. But it has done nothing to appease lawmakers in Washington who blame what they see as a cheap yuan for the loss of millions of U.S. manufacturing jobs.

U.S. Senator Charles Schumer said on Wednesday that he and other colleagues would push for a vote in the next two weeks on legislation that would allow the Commerce Department to use anti-dumping and countervailing duty laws against China or any other country with a fundamentally misaligned exchange rate.

Years of meetings and discussions with Chinese officials in an effort to persuade China to float its currency have repeatedly failed to produce lasting and meaningful results, the New York Democrat said.

Treasury Secretary Timothy Geithner delayed an April 15 report on whether China was manipulating its currency to give Beijing more time to act on its own. He has argued it is in China's own interest to reform.

Geithner, who was in Beijing two weeks ago for high-level talks, is expected to face a grilling when he goes before the Senate Finance Committee on Thursday.

With U.S. unemployment still close to 10 percent and Chinese exports now growing at a rate of almost 50 percent, it is likely that the rhetoric on this issue coming out of Washington will soon get more heated, said Brian Jackson, a strategist with Royal Bank of Canada in Hong Kong.

(Additional reporting by Michael Wei; Writing by Alan Wheatley; Editing by Ken Wills & Kim Coghill)