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China Trade Surplus Widens in April

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Source: AFP

China announced Thursday that 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 US$18.42 billion in April, the customs agency said. Anaemic 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 per cent year-on-year to US$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 per cent to US$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 per cent and exports to increase 8.5 per cent.

Exports to the European Union grew a mere 0.3 per cent 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 US$31.48 billion ‒ the largest in more than a decade ‒ owing to falling overseas demand.

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

Last week, US 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.