Trade surplus rebounds on strong exports

PUBLISHED : Saturday, 12 May, 2007, 12:00am
UPDATED : Saturday, 12 May, 2007, 12:00am

April's figure hits US$16.88b

The mainland's trade surplus more than doubled last month from a month earlier, rising to US$16.88 billion, according to the General Administration of Customs.

But the figure was a big decline from February's US$23.7 billion, the second-highest monthly surplus on record, as exports grew more slowly and imports rose faster over the past month, Xinhua reported yesterday.

The mainland's trade surplus for the first four months of the year was US$63.31 billion, 88 per cent more than in the same period last year.

Last month's surplus was 60.8 per cent bigger than the US$10.4 billion recorded in April last year.

The surplus for March this year was US$6.9 billion.

Some economists have argued that the sharp rise in February and deep slump in March were caused by exporters delivering March orders in February to avoid losing out on export tax rebates.

The administration remains optimistic it will be able to bring down the politically sensitive surplus, the main source of trade friction between Beijing and its trading partners, the United States in particular.

The good news in last month's figures is that import growth accelerated to 21.1 per cent year on year, from 14.5 per cent in March, reflecting strength in demand for both investment and consumer goods.

However, import growth still lagged behind growth in exports, which grew by 26.8 per cent year on year last month.

Xiaoping Ma, an economist with HSBC, said he expected mainland export growth would remain at about 20 per cent year on year in the coming months despite Beijing's efforts to rein in the trade surplus because demand from the European Union and emerging markets remained strong.

He said the increasing trade surplus, along with rising capital inflows, would force the central bank to take more aggressive measures to tighten liquidity by issuing more sterilisation bills, raising reserve-requirement ratios and lifting interest rates.

'We expect the People's Bank of China to raise both deposit and lending rates by at least 27 basis points in the coming months, followed by at least one further raise in the second half,' Mr Ma said.

The trade gap looks likely to irk US critics who say Beijing is keeping the yuan unfairly undervalued to help the country's exporters, just ahead of a crucial bilateral economic summit.

The report came a day after President Hu Jintao and US counterpart George W. Bush had a telephone conversation to discuss the countries' economic relationship. 'Frank and sincere dialogue' was needed to prevent trade disputes escalating, Mr Hu told Mr Bush, according to the Foreign Ministry.

It also came a day after US customs said the United States' trade deficit with China shrank by 6.4 per cent month on month to US$17.2 billion in March, as US exports to the mainland hit an all-time high and imports of Chinese products dipped.

Vice-Premier Wu Yi and US Treasury Secretary Henry Paulson will meet in Washington for the second round of the 'Strategic Economic Dialogue' on May 23 and 24, the highest-level talks between the two powers to discuss a wide range of economic issues.