Photo: Stuck in Customs on flickr
China’s trade surplus rebounded in April, to $11.43 billion from a modest $140 million in March, according to China Daily. The rise was the result of both a 29.9% year-over-year increase in exports, and a small decline in the import growth rate.The number smashed expectations of around $3-$4 billion.
The slow down in import growth was the result of a decline in commodity demand, versus Q1 2011, and is expected to continue according to Societe Generale’s Wei Yao.
Going forward, export growth is expected to remain relatively resilient as we enter the busy season of overseas orders. On the other hand, import growth could slow further in both value and volume term if commodity prices stabilise at current level. Therefore, we expect trade surpluses of similar sizes to last for more months, which would add more difficulties to China’s central bank’s liquidity management.
Of course, this will only amp the calls by U.S. politicians for a yuan revaluation (despite the fact that the currency is already at a 17-year high). The Chinese government may be close to moving on the issue to deal with its own FX reserve and liquidity problems.
Photo: Societe Generale
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