China’s April trade surplus balloons

Washington pressured Beijing for a stronger currency.
The trade surplus – a constant thorn in the side of Sino-US relations – dwarfed the US$139 million surplus posted in March and a Dow Jones forecast for US$1 billion in April.
Exports rose 29,9 percent year-on-year to US$155,7 billion – a record high value for a single month – while imports increased 21,8 percent to US$144,3 billion, customs authorities said in a statement.
The data also showed China swung to a surplus of US$10,3 billion for the first four months of the year compared with a deficit of US$1,02 billion in the January to March period – its first quarterly deficit in seven years.
The Shanghai Composite Index closed up 0,63 percent at 2 890,63. Analysts said the surplus was due in large part to weaker imports after a recent correction in global commodity prices and a slowdown in the Chinese economy.
The surplus was caused by “weaker imports because of lower commodity prices and slower demand growth in China”, Citigroup economist Ken Peng said.
“I expect an even bigger surplus in May.”
China’s tight control of the yuan and its massive trade surplus with the United States are at the forefront of talks between US and Chinese officials meeting in Washington for the annual Strategic and Economic Dialogue.
Ren Xianfang, an analyst at IHS Global Insight in Beijing, said the surplus was bad timing for Chinese officials participating in the two days of high-level talks, which are set to wrap up yesterday.
“I think it will give support to the US case that China is not making enough effort to rebalance,” Ren said.
The United States has led a chorus of international calls for a stronger unit, claiming China’s currency control gives its exporters an unfair trade advantage by making their products artificially cheap.
The currency has strengthened 5 percent against the dollar since last June when Beijing pledged greater flexibility – but the gains have not satisfied critics who claim the yuan is undervalued by as much as 40 percent.
The central bank set the yuan central parity rate – the midpoint of an allowed trading band – at 6,4950 to the dollar, the strongest rate since last June.
Beijing typically allows the yuan to strengthen ahead of important meetings in an attempt to defuse criticism of its exchange rate policy.
US Treasury Secretary Timothy Geithner opened the Sino-US talks on Monday by placing China’s need for a more flexible exchange rate and more open capital markets at the top of the economic agenda. – AFP.