China reported another big monthly trade surplus on Friday, adding weight to US calls for a stronger yuan to help reduce imbalances in the global economy.
The surplus for April was $10.46 billion, down a touch from $11.2 billion in March but more than double the April 2005 figure of $4.6 billion, the customs administration said.
China's trade surplus tripled in 2005 to $102 billion and in the first four months of this year it has swollen 58 percent from the same period in 2005 to $33.75 billion.
"Judging from the trend, I think the full-year trade surplus will probably exceed $130 billion," said Song Guoqing, an economist at China Stock Exchange Executive Council, a think tank in Beijing.
He said a ruling on Wednesday by the US Treasury that China was not deliberately holding down the yuan to gain an unfair trade advantage could help Washington achieve its aim. Beijing could have dug in its heels on the currency if the finding had gone the other way.
"The pace of the yuan's appreciation against the dollar is likely to quicken. The fact that the United States did not brand China a currency manipulator has helped create some room for concessions," Song said.
However, the yuan was soft on Friday. Even though the dollar sank to eight-month lows against the euro and the yen, it gained a bit to 8.0060 yuan from 8.0041 at Thursday's close.
Washington believes the yuan would be worth a lot more if it were freely traded because China recorded a balance-of-payments surplus last year equal to 9.3 percent of national income and sits atop an $875.1 billion mountain of foreign currency reserves, the world's largest.
The Treasury expressed disappointment that the yuan was not floating more freely, something that it said was in China's own interest. Currently, the central bank buys most of the dollars flowing into China, thereby keeping a lid on the yuan.
IMPORTS PUZZLE:
The April trade surplus was larger than the $9.0 billion expected by financial markets, mainly because annual import growth slowed to 15.3 percent from 21.1 percent in March.
Ben Simpfendorfer, a strategist with Royal Bank of Scotland in Hong Kong, said the softness was a reaction to a surge in imports of commodities in March and was likely to be temporary.
But he said export growth was also likely to strengthen in coming months, resulting in a higher full-year trade surplus.
Rob Subbaraman with Lehman Brothers in Hong Kong said the dip in imports, if sustained, would be a concern for the rest of Asia, which has benefited hugely from Chinese demand.
"But people will reserve judgement. It's hard to explain, given that oil prices are high and many other indicators are suggesting the economy is strong and, if anything, picking up recently," Subbaraman said.