China's March trade surplus shrinks 70pc
Export growth slowest in five years
China said yesterday its politically sensitive trade surplus narrowed by more than 70 per cent last month from February, giving Beijing ammunition to counter US complaints about its trade practices.
The March trade surplus was US$6.87 billion, down from a near record of US$23.8 billion in February, and 38 per cent down from the US$11.2 billion recorded in March last year, customs data showed.
Exports rose just 6.9 per cent last month - the slowest in five years - to US$83.43 billion, while imports jumped 14.5 per cent to US$76.56 billion, the General Administration of Customs said on its website.
The release of the trade figures came on the day the US filed two new cases against China with the World Trade Organisation over violations of intellectual property and limits on market access for US movies, music and books.
Vice-Minister of Commerce Gao Hucheng was quoted by state media yesterday as saying the wider trade surplus in the first two months of the year was caused by exporters shipping orders ahead of the Lunar New Year holiday in late February.
Analysts said expected reductions in various export tax rebates as well as a slowing US economy were also factors. Yesterday, the China Iron and Steel Association said tax rebates for some steel products would be cut from 8 per cent to 5 per cent. China is the world's biggest steel producer.
One analyst said the reduction in the trade surplus in March was expected as exporters sought to beat new taxes, quotas or tariffs. Increased exports in the first two months of the year were mainly in the areas of heavy industry and resources, while exports of electronics and light manufactured goods were stable.
'It's not a big surprise. We've been arguing that these January-February numbers were artificially high and that you would see artificially low numbers coming forward,' said Jonathan Anderson, chief economist for Asia for investment bank UBS.
But a number of issues that could worsen Sino-US trade relations still loomed. 'It's hard to imagine a more risk-fraught year for bilateral relations between the US and China than 2007,' he said in a report last week.
Announcing the US action on Monday, US Trade Representative Susan Schwab said the requests for dispute settlement consultations - the first steps in taking a complaint to the WTO - 'should not be viewed as hostile action against China'.
'Inadequate protection of intellectual property rights in China costs US firms and workers billions of dollars each year,' Reuters quoted Ms Schwab saying.
The central government hit back at the move yesterday. 'To do a better job in combating piracy, we need dialogue and co-operation, not confrontation and condemnation,' said Tian Lipu , head of the State Intellectual Property Office.
Next month, Vice-Premier Wu Yi will travel to Washington to discuss issues such as piracy, the trade surplus and the yuan through the Strategic Economic Dialogue, a policy forum co-chaired by US Treasury Secretary Henry Paulson.
There are expectations the Chinese leader will take with her a multibillion-dollar shopping list aimed at addressing the trade imbalance.
Out of kilter
China's first-quarter trade surplus, in US dollars, has doubled year on year to $46.4b