China's Trade Surplus Widens in April

A slowdown in imports 'points to a real weakness in the domestic economy,' commented Alistair Thornton, economist for IHS Global Insight.

China on Thursday said its trade surplus widened in April as import growth slowed, casting doubts over the capacity of the world's second-biggest economy to rebound quickly.

The country recorded a better-than-expected surplus of $18.42 billion in April, the Customs Agency said. Anemic growth in imports covered weak exports, which continue to be hit by difficulties in Europe, China's biggest market.

Imports edged up just 0.3% year-on-year to $144.83 billion in April, raising questions about the government's ability to boost domestic demand as it tries to rebalance the economy away from export dependence.

Growth in shipments abroad rose just 4.9% to $163.25 billion.

"The export story is clear. We know the eurozone crisis is dragging down exports. We had just not anticipated by how much," said Alistair Thornton, economist for IHS Global Insight. "Imports are much more worrying. They point to a real weakness in the domestic economy."

A survey of economists by Dow Jones Newswires had forecast imports to rise 10% and exports to increase 8.5%.

Exports to the European Union grew a mere 0.3% from January to April, customs data showed, reflecting the recent string of poor data indicating a contraction in manufacturing activity in China's workshops and factories.

Thursday's figures add to concern about the state of the Asian giant, which plays a huge role in the growth of the world economy.

While April's trade surplus is the second in a row, the country in February posted a huge deficit of $31.48 billion -- the largest in more than a decade -- owing to falling overseas demand.

"Today's trade data lent further to support our view that China's economic growth has not bottomed out yet and that the authorities should provide more easing to stabilize momentum," said Wei Yao, an economist with Societe Generale.

China's economy grew just 8.1% in the first quarter, hit by weak demand at home and abroad, despite a string of government measures to help struggling small businesses and support the export sector.

The central bank in February cut the amount of cash that banks must hold in reserve for the second time in three months as policymakers moved to increase lending and boost domestic consumption. Analysts expect more measures following the release of Thursday's data.

The economy grew 9.2% last year and 10.4% in 2010, but the government in March set a growth target of 7.5% for this year, signaling markedly lower expectation.

Economists do not expect growth to strengthen until the second half of the year, when easing measures are expected to kick in and growth to pick up in Europe and the United States.

"Looking forward, there will be easing on lending as well as more structural measures, such tax cuts and more investment in social housing," said HSBC economist Qu Hongbin.

The trade data should further ease tensions with the United States, which persistently argues that Beijing keeps its currency artificially low to subsidize its exports.

Last week, U.S. Treasury Secretary Timothy Geithner, in Beijing for annual economic talks between the two countries, called for China to continue to let its currency appreciate further.

China's trade surplus narrowed in 2011 to $155.14 billion, and analysts expect it to continue to shrink this year as both exports and imports remain weak.

Copyright Agence France-Presse, 2012

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish