China posted its biggest trade surplus in four months in April, swinging from a trade deficit
in the first quarter, as exports hit a record on stronger global demand despite initial signs of a pinch from Japan's earthquake and nuclear crisis.
The surplus of $11.4 billion, nearly four times greater than
expected, could reignite fresh foreign criticism of Beijing's
currency policy as senior Chinese and U.S. officials sought to
resolve disputes over trade and other policy differences.
Exports grew a stronger than anticipated 29.9 percent in April from a year earlier to $155.7 billion while imports climbed at a lacklustre 21.8 percent — a reflection of
sustained policy tightening and domestic firms' efforts to hedge
higher global commodity prices.
"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 strong 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."
Hu Yuexiao, economist with Shanghai Securities, expected
China's import growth to ease further in May due to falling
global commodity prices, pushing up the trade surplus.
China's imports from Japan were $16.0 billion in April, which was 14.9 percent lower than the $18.8 billion in March, as production and shipments were interrupted by the earthquake and
tsunami. Exports to Japan also shrank to $12.1 billion in April,
or 7.7 percent less than in March. 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 from a year earlier and rose 7.4
percent month-on-month, the customs administration said.
China recorded a $1.02 billion trade deficit in the first
quarter of the year — the first quarterly trade deficit since
2004, reflecting higher global commodity costs.
PRESSURES ON YUAN
The strong data, including a 16 percent rise in China's
trade surplus with the United States to its widest since
November, came as senior U.S. and Chinese officials met in
Washington to tackle some key disputes.
The data could give fresh ammunition to some U.S. 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.
U.S. officials criticized China on Monday for its crackdown
against dissidents but the world's two largest economic powers
agreed on the need to work together to boost global growth at
the start of two days of the Strategic and Economic Dialogue.
The meeting covering a range of economic and diplomatic
issues are aimed at easing their often tense policy differences.
Some analysts project that higher import bills, along with
the government's efforts to rebalance the economy in favour of
boosting domestic demand, could cut China's trade surplus for
the full-year.
Chinese officials hope a smaller trade surplus with the rest
of the world could ease criticism from key trade partners that
it has given exporters an unfair boost with a cheap currency.
Still, there are plenty of signs that the government will
tolerate faster yuan appreciation this year as it seeks to deal
with imported inflation.
China loosened the yuan from a nearly two-year
peg to the dollar in June, and this year the People's Bank of
China has guided the yuan to record highs. It has now
appreciated about 5 percent since June and 1.5 percent since the
start of this year.
Tapping the brakes on money and lending growth has been a
crucial part of Beijing's campaign to rein in inflation, which
probably hit a 32-month high of 5.4 percent in the year to
March.
Yuan forwards barely reacted to the data. The Australian
dollar rose to $1.0797 from around A$1.0784 just before
the Chinese data, and later retreated to $1.0777.
Traders said the lacklustre reaction in the commodity-linked
Aussie was owing to the weakness in Chinese imports coupled with
worries over how high Chinese inflation still is, data on which
is due on Wednesday.
