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China’s trade surplus shrinks as imports rise

China’s trade surplus shrinks as imports rise
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First Published: Mon, May 10 2010. 09 02 PM IST
Updated: Mon, May 10 2010. 09 02 PM IST
Beijing: China’s trade surplus shrank 87% in April from a year earlier as imports grew faster than exports because of stimulus-driven domestic demand.
The surplus of $1.68 billion (Rs7,560 crore), reported by the state-run Xinhua News Agency, compared with a deficit in March. Imports gained 49.7%. Exports rose 30.5%, topping the 28.9% median estimate of 30 economists in a Bloomberg News survey.
A 79% decline in the trade surplus in the first four months of 2010 from a year earlier may ease pressure for gains in the yuan and support Premier Wen Jiabao’s argument that the currency isn’t undervalued. The sovereign-debt crisis in Europe that prompted a loan package of almost $1 trillion to help nations under attack from speculators may also encourage Chinese officials to delay ending the yuan’s peg to the dollar.
“A small trade surplus has re-emerged, but clearly on a downward trend, which we believe will limit the size of yuan appreciation,” said Shen Jianguang, a Hong Kong-based economist at Mizuho Securities Asia Ltd who formerly worked at the International Monetary Fund and the European Central Bank. “Exports’ strong momentum will not last long, amid a weakening European outlook.”
Export growth is driven by gains in machinery and electronics shipments, state television reported, citing the customs bureau. Higher soybean and iron ore prices and demand for vehicles are swelling import costs, the report said.
China’s April exports were $119.9 billion and imports were $118.2 billion. The trade surplus compared with a $7.24 billion trade deficit in March that was the country’s first in six years.
Smaller trade surpluses may ease pressure for yuan appreciation by reducing capital inflows that add to overheating risks. The trade surplus shrank 34% in 2009 and may narrow sharply this year, the ministry of commerce said last month.
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First Published: Mon, May 10 2010. 09 02 PM IST