China's trade surplus shrinks

China's trade surplus fell to its lowest in nine months in January after imports surged, supporting the government's case ahead of a G20 meeting that it is doing enough to spur domestic demand without speeding up currency appreciation. The trade surplus shrank to $6.5 billion from $13.1 billion in December, well short of forecasts for a $10.7 billion gap.
In the past, a weaker surplus would have caused concern for the Chinese government, but more recently it has been trying to shift the economy towards greater reliance on consumption and less on exports, in part to address critics who say that its success has come at the expense of other countries.
It was the third consecutive month of a declining trade surplus, and though not enough to mark a definitive change, that streak provides a symbolic boost to China before the G20 meeting this week of finance ministers from the world's biggest developed and developing economies.
Analysts warned, however, that its surplus could rebound later this year. "There tends to be a seasonal pattern and there is generally a decline in the trade surplus at the beginning of the year," said Jian Chang, an economist with Barclays Capital in Hong Kong. "Exports tend to be weak in the first quarter, while there is no such pattern in imports."
The G20 meeting in Paris on February 18-19 will try to hash out a gameplan for tackling the global economic imbalances that exacerbated and, some say, helped trigger the financial crisis in 2008, with China's yawning trade surplus seen as one of the chief problems.
China's imports rose 51 percent in January from a year earlier, blowing past market forecasts for a 28 percent rise. Exports rose 37.7 percent in January, topping expectations for a 22.4 percent rise, the customs administration said. Iron ore prices edged up further to fresh highs after the data, which showed that China was building steel product stockpiles in anticipation of more demand.
Yu Song and Helen Qiao, economists at Goldman Sachs, said that the import and export growth reflected well on both the Chinese and global economy. "The strong exports growth momentum is supported by improvements in economic conditions in China's major trading partners, and strong imports growth momentum is supported by strong domestic demand growth," they wrote in a note. "Besides, the rise in imported commodity prices likely contributed to strong imports data as well."
Copper and iron ore prices ran near record highs for much of January and oil was also costly, pushing up China's import bill. Commodity-exporting countries were the clear beneficiaries. Imports from South Africa were up 212.5 percent year on year, while shipments from Canada and Brazil were up 146.7 percent and 95.4 percent, respectively.