China on Monday posted a record trade surplus for October, but the total was smaller than
expected, as climbing raw material costs and strengthening domestic demand gave a boost to imports.
The final months of the year are usually busy ones for Chinese factories shipping Christmas orders, but imports grew faster than exports for the first time since March, possibly reflecting economic weakness in key markets such as the United States.
The trade surplus came in at $27.05 billion, surpassing the record of $26.9 billion set in June and September's $23.9 billion total, but well below forecasts of $30 billion.
"The strong growth in imports should be attributed to China's encouraging policies and the strong domestic economy," said Li Yushi, vice-director of a Ministry of Commerce think-tank in
Exports grew 22.3 percent in October from a year earlier, with imports up 25.5 percent. Economists had expected export growth of 22.4 percent, with imports up 20.0 percent.
"China has been trying to boost imports this year, and it's time for these policies to start having an impact," Li said. "Of course, higher import prices, including oil, are also a reason."
The smaller-than-expected surplus will be a relief to the Chinese authorities, who are under growing pressure from the United States and the European Union to reduce the surplus by
letting the yuan rise faster.
"Export growth, I think, will continue to slow to below 20 percent in 2008 because U.S. growth is slowing down and China has tried to control exports itself," said Paul Cavey with Macquarie
Securities in Hong Kong.
Cavey said he also expected domestic demand to pick up next year. With commodity prices rising strongly, this should boost both import volumes and prices. "So that should begin to squeeze the trade surplus during the course of 2008," Cavey said.
Despite the surprisingly small October outcome, the rolling 12-month surplus increased to $255.9 billion from $253.7 billion in September and $245.1 billion in August.
The surplus in the first 10 months of 2007 was $212.4 billion, up 59 percent from $133.6 billion in the same period last year. The surplus for all of 2006 was $177.47 billion.
Trade Surplus With The EU
China's trade surplus with the European Union widened to $13.9 billion in October from $12.5 billion in September, ratcheting up pressure on Beijing ahead of a summit with the EU later this month.
Customs data released on Monday showed China's exports to the 27-nation bloc grew by 30.7 percent from a year earlier, in line with September's 30.8 percent increase.
Growth in imports from the EU slowed to 21.0 percent, from September's 21.7 percent.
The EU's deficit is pulling closer to that of the United States, which imported $15.4 billion more from China than it exported in October. The bilateral U.S. deficit in September was $15.35 billion.
China's imports from the United States grew by 16.3 percent from a year earlier in October, outpacing exports at 15.5 percent, the customs administration said on its Web site.
The EU has become increasingly vocal in its criticism of what it sees as a lack of action by Beijing to address the large bilateral trade imbalance, and a high-level EU delegation is due in Beijing later this month to press its case.
Separately, the yuan will be on the agenda next month for the latest round of the ministerial-level Sino-American "strategic economic dialogue".