China trade surplus surges

China stormed back to post a hefty trade surplus in April as exports hit a record while imports eased more than expected, weighed down by sustained monetary tightening and high commodity prices. The surplus of $11.4 billion, nearly four times greater than expected, comes as China holds high-level economic and strategic talks in Washington and could fuel US criticism that Beijing limits the yuan''s appreciation to support its exports industry.
The trade account swung from a small, rare trade deficit in the first quarter, pushed by a stronger-than-anticipated 29.9 percent rise in exports over a year earlier to a record $155.7 billion. Imports climbed 21.8 percent, well short of estimates and analysts were at loggerheads whether this should be read as a sign of surprising weakness in the world''s fastest-growing economy or simply deferred purchases because of soaring commodity bills.
"Exports are much stronger, that''s the basic thing. Global demand is still pretty strong, a bit stronger than many people feared," said Tao Wang, economist with UBS in Beijing. "On the import side, we think that commodity exports had been very strongly up until February and there has been quite a bit of inventory build-up. So right now we think it''s going through some adjustment."
But Xu Biao, an economist with China Merchants Bank in Shenzhen, said the lower-than-expected imports might contain a much more serious warning. "Concerns about a slowdown have certainly intensified, and the risks of a worst-case scenario for the Chinese economy, namely a relatively low growth rate and a high inflation, are on the rise," he said.
The median forecast of economists polled by Reuters last week was for exports to rise 29.4 percent and imports to grow 28 percent, resulting in a trade surplus of $3 billion. On a seasonally adjusted basis, exports rose 35.1 percent in April from a year earlier and rose 12.3 percent from the previous month. Imports gained 27.4 percent year-on-year and 7.4 percent month-on-month, the customs administration said. China''s trade numbers also registered an impact from Japan''s earthquake and subsequent nuclear crisis. Imports from Japan were $16 billion in April, down 14.9 percent from March, as production and shipments were interrupted.
WEAK YUAN POLICY The data showed China''s trade surplus with the United States swelled 16 percent to its widest since November. The data provides fresh ammunition to those US lawmakers who have linked the trade imbalance to China''s currency policy, saying a weak yuan gives Chinese manufacturers an unfair advantage in global markets and costs American jobs.
China''s overall trade surplus narrowed last year, but that provided little comfort for officials in Washington because the surplus with the United States grew 26 percent to more than $180 billion. On the first of two days of talks on Monday, the United States pressed China on a range of familiar themes, including that Beijing should push the closely managed yuan up at a faster pace against the dollar.
"This number will likely add to the pressure from Washington for Beijing to allow faster currency appreciation, but more importantly should persuade Chinese policymakers that a stronger yuan can be tolerated by the economy," said Brian Jackson, an economist with the Royal Bank of Canada in Hong Kong.