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June 10, 2011 6:09 am
China’s trade surplus in May was smaller than expected, adding to evidence that the country is slowly cutting its reliance on exports, in a development that is seen as necessary for rebalancing the global economy.
China on Friday reported a surplus of $13.05bn in May, larger than its $11.4bn surplus the previous month, but well below market forecasts, which mainly ranged from $18-20bn.
The surprisingly narrow surplus was largely due to import strength. Imports rose 28.4 per cent in May from a year earlier, up from a 21.8 per cent pace in April. Exports slowed to 19.4 per cent year-on-year growth, down from a 29.9 per cent increase in April.
Jun Ma, an economist at Deutsche Bank, cautioned against reading too much into the data, noting that monthly changes were very volatile, but he added that the overall trend was clear.
“Longer term, I think China will continue to see some moderation in export growth because of currency appreciation and labour cost pressure,” he said.
China’s overall trade surplus in the first five months of the year was $22.97bn, just over one third smaller than the same period last year, according to government data.
Critics have long pointed at China’s large trade surplus as proof that the country is unfairly benefiting from a policy of holding down the value of its currency. Economists have said that Beijing’s over-reliance on exports has made global growth less stable.
China’s trade surplus hit a record of nearly $300bn in 2008 and has steadily diminished since then as demand for its products have collapsed under the weight of the global financial crisis.
Faced with stubborn inflation, China has also been guiding up the value of its currency, the renminbi, as a way of blunting price pressures. While still tightly controlled, the Chinese currency has risen more than 5 per cent against the dollar over the past year.
Speaking in Beijing on Friday, John Lipsky, acting head of the International Monetary Fund, said that a stronger currency was “one ingredient of a comprehensive package of reforms” that would encourage Chinese consumption and help the global economy.
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