China’s exports advanced at a 28% pace in May, despite growing economic turbulence in the United States and Europe, underscoring yet again that the Asian giant doesn’t need Western markets to flourish.

The strong export growth should also give China’s central bank more room to maneuver in its battle against escalating inflation at home.

After growing 21.9% in April, Chinese exports climbed 28.1% to $120.5 billion last month, China’s customs bureau reported. Exports to the United States grew 9.1% in the first five months of year, while exports to the European Union climbed 27.4%.

The increases demonstrate that global demand for Chinese goods remains strong, even though many Western markets are battling the fallout of a worldwide financial crisis. Indeed, the export statistics are serving as evidence of an economic theory known as “decoupling,” in which emerging economies in Asia and Europe have developed enough  market place muscle to no longer be dependent on the U.S. economy for growth.

And “decoupled” markets can survive - and even thrive - even if the United States were to spiral down into a recession.

The report “suggests that those saying that exports are collapsing are wrong,” Stephen Green, head of China research at Standard Chartered Bank PLC in Shanghai, said in a report.

Trade did grow with the more mature economies of the West. But China got its biggest boost from such emerging markets as India. Two-way trade with India increased by 70% in the first five months of 2008, the fastest rate of growth among China’s Top 10 trading partners.

China is also forging stronger ties with Latin America. In 2004, Chinese President Hu Jintao predicted that Sino-Latin American trade would reach $100 billion by 2010.

In reality, it reached $102.6 billion in 2007, surging 42% from the year before.

The fact that Chinese exports have more than weathered the global financial storm is a huge blow for critics who had earlier predicted this credit-related mess would cause China to stumble.

China’s economy grew by 10.6% in the first quarter of 2008, despite complications stemming from the U.S. credit crunch, the Chinese New Year and the worst ice storm the country had seen in decades. 

“We have a lot of evidence to support the decoupling view,” Timothy Bond, Merrill Lynch & Co. Inc.’s (MER) chief Asia economist, said in a research note.

Indeed, the recent surge in exports is proof that China will continue to advance - with all but a complete collapse of the U.S. economy.