China: Trade Surplus Jumps

Econintersect:  The General Administration of Customs for China announced today that the country posted a trade surplus of $18.4 billion (U.S. dollars) in April. That was a significant increase from the surplus of $5.4 billion a month earlier and an even bigger jump from the average near zero for the first quarter ($223 million average per month).  The main driver in the improved balance of payments came from weak imports which were only up 0.3% year-over-year.  Exports increased 4.9% from a year earlier.  Robin Kwong in the Financial Times says that the surplus was nearly double what Chen Deming, commerce minister, forecast last week at the US-China Strategic and Economic Dialogue.

The lower level of imports may reflect slowing investment within China rather than a slowing of consumer activity, according to the Financial Times.  This is an adjustment that GEI contributor Michael Pettis has argued is a necessary adjustment for China going forward.  The Financial Times also quoted the opinion of Wei Yao, economist at Société Générale that the soft imports might cause some import tariffs to be reduced but that no monetary policy changes were likely.

It must be remembered that this only only month of surptising data.  From the Financial Times:

However, economists at Goldman Sachs point out that monthly trade data are highly volatile and the April export numbers were partly affected by a high base last year. “We believe this effect will reverse in the next three months starting from May,” they wrote in a client note.

John Lounsbury

Sources:

• China reports trade surplu of US$18.4 billion in April (Ye Zhen, Shanghai Daily, 10 May 2012)

• China surplus jumps on weak imports (Robin Kwong, Financial Times, 10 May 2012)

• China Returns to Positive Balance of Trade (GEI News, 10 April 2012)

• Five Ways for China to Rebalance (Michael Pettis, GEI Analysis, 11 April 2012)

• Econintersect Asia/Pacific newspaper page