Houston Community News >> China Trade Surplus
5/11/2007 BEIJING-- China’s
April trade surplus more than doubled from March, the government said on Friday,
as a purchasing mission on a US tour signed billion-dollar deals in a bid to
narrow the yawning trade gap.
Last month the world’s fourth-largest economy saw its trade surplus reach $16.9 billion, up from $6.9 billion the month before, the Xinhua news agency reported on Friday, citing customs figures.
“Many of the engines of China’s exports such as textile, clothing and steel are facing overcapacity on their home turf,” said Zhang Yansheng, an economist with the National Development and Reform Commission.
“Companies in these sectors must expand into overseas markets in order to survive,” he was quoted by Xinhua as saying.
The trade figures were reported ahead of a much-anticipated round in the Strategic Economic Dialogue between the two nations, to be held in Washington later this month with Treasury Secretary Henry Paulson as host.
After a trade surplus of $15.9 billion in January and $23.6 billion in February, economists said what needed explanation was not why it had been so large in April, but rather why in March it had been so small.
The most likely reason was that in March exports had been impacted by the abolishing of a series of tax incentives, they said.
In the first four months of the year, the aggregate trade surplus reached $63.3 billion, Xinhua said. This was a rise of nearly 90 per cent from the same period in 2006.
Boosted by trade, China’s foreign exchange reserves, the largest in the world, are likely to hit $1.6 trillion at the end of 2007, up from $1.2 trillion now, according to Standard Chartered economist Stephen Green.
“This is a huge, huge number, and appears, at first sight, unbelievable,” Green said in a research note.
“Trust us though, the wheels are already turning and it is going to take a gargantuan effort on the part of Beijing’s policymakers to prevent it.”
April exports stood at $97.5 billion, an increase of 26.8 per cent from the same month a year ago, while imports reached $80.6 billion, a rise of 21.3 per cent, Xinhua said.
As the customs announced another massive trade surplus, state media reported a Chinese business delegation was visiting the United States, and had so far signed deals worth $4.3 billion with local companies.
Chinese computer giant Lenovo Group inked orders for $1.3 billion with Microsoft Corp to buy Windows, Office and other software suites for its personal computers, the China Daily reported. The delegation could end up signing deals totalling about $16 billion, it said.
April’s trade data are likely to renew debate about the value of China’s currency, a main source of trade friction with the United State, which accuses Beijing of artificially keeping it low to give exporters an unfair advantage.
Allowing the Chinese currency to appreciate at a faster pace will be in China’s interest, former Federal Reserve chairman Alan Greenspan was quoted as saying on Friday in Singapore.
“It’s in China’s self-interest to allow the renminbi (yuan) to move up faster,” a delegate who attended a closed-door Merrill Lynch conference quoted Greenspan as saying.
However, Chinese economists argued the situation was more complicated than that.” China needs to adopt measures to change its economic structure, and not just rely on yuan appreciation as some have said,” said Sun Lijian, an economist at Shanghai’s Fudan University.
“China needs to make ordinary people feel confident about their future, so they stop saving so much money in the bank and start spending more.”
The way to make Chinese feel more comfortable about their financial future is to boost welfare services, such as healthcare and pensions, Sun and other economists have argued. “But this takes time, and it’s hard to say when the trade situation will change,” Sun said.
(Contributed by The International News)