China's trade surplus surged in April
China reported an unexpectedly large trade surplus in April, likely helping U.S. officials in their demands for faster Chinese currency appreciation while the two countries hold high-level talks in Washington.
China's trade surplus grew to $11.4 billion in April after the country recorded a rare trade deficit the first three months of the year. Data showed that the pace of imports slowed as policymakers unveiled tightening measures in the banking and real estate sectors.
The trade numbers released Tuesday come as envoys from China were meeting senior U.S. officials in Washington this week at the annual Strategic and Economic Dialogue.
Among the first topics discussed were human rights and the Chinese currency, which the U.S. charges gives China an unfair trade advantage by being artificially undervalued.
The Chinese currency, known as the yuan or renmenbi, was de-pegged from the dollar last June and has risen against the greenback by more than 5% since then. China's central bank, which lets the yuan float within a controlled band, set the exchange rate Tuesday before trading at a record high of 6.4950.
Analysts say China is under more pressure from domestic inflation, rather than from Washington, to appreciate the yuan. The nation's consumer price index hit a 32-month high in March. A stronger currency would make imports cheaper and relive pressure on the central bank to sterilize incoming foreign currency to keep the exchange rate low.
China's General Administration of Customs said exports grew 29.9% in April from a year earlier, to $155.7 billion, and that imports rose 21.8% from a year earlier, to $144.3 billion.
China's trade deficit in the first quarter sparked some optimism that the country may be rebalancing its economy, which could help stabilize the global financial climate.
But analysts said April’s trade figures underscore the effectiveness of China's industrial and monetary policy in protecting its export sector.
"Despite recent signaling that a faster renminbi appreciation schedule is somewhat welcome and slow but steady movement on policy rates over the past half-year, China appears to be absolutely no closer to the hallowed goal of rebalancing," Alistair Thornton and Xianfang Ren, analysts for IHS Global Insight, wrote in a note to clients Tuesday.
-- David Pierson
Photo: A man walks past containers at a port in Shanghai on Tuesday. Credit: Aly Song / Reuters