China’s Trade Surplus Rises to $5.73 Billion in March

China’s trade surplus rose to $5.73 billion in March from $4.6 billion in February as electronics and textile shipments underpinned exports, while measures to cool the economy damped import demand.

Exports rose 32.8% in March from a year earlier to $60.9 billion, while imports grew 18.6% to $55.1 billion, according to customs data seen by Reuters on Monday and confirmed by the official New China News Agency.

In March 2004, there was a trade deficit of $540 million.

“We are looking at weaker imports off the back of slower investment demand,” said Ben Simpfendorfer, an economist at J.P. Morgan & Co. in Hong Kong.

Simpfendorfer said recent data suggested that electronics were underpinning the export growth, with shipments of notebook computers alone almost equaling total textile shipments.

Since mid-2003, Beijing has been trying to cool the economy with a series of policies aimed at reining in breakneck credit and investment growth.

The measures have included curbs on new industrial projects, tighter controls on loans to the metals and property sector and, in October, the first interest rate increase in nine years.

“The cooling measures are having an impact,” Simpfendorfer said. “Investment in the industrial sector is definitely cooling, but the one remaining risk is the residential construction sector.”

The slowdown in import growth reflected cooling industrial investment, which relies on foreign goods such as high-quality steel, machinery and electronic components.

Property developers rely more on domestic suppliers for concrete, glass and other materials.

However, China’s import growth was likely to pick up further this year because fixed-asset investment growth should rebound, said Zhuang Jian, economist at Asian Development Bank in Beijing.

“Investment growth will probably rebound, boosting demand for raw materials and overall imports,” he said.

Although China runs trade deficits with many countries, such as Japan, its growing surplus with the United States has become a hot political issue, with some U.S. lawmakers and industry groups calling for tariffs on Chinese-made goods such as some clothing items.

The data showed exports of clothing in March rose 15.9% from a year earlier to $14 billion, while exports of yarn and fabric climbed 24.8% to $8.4 billion.

The U.S. says imports of some Chinese textiles surged 300% to 1,500% in the first quarter of this year because a global pact governing textile trade expired at the end of 2004.

The European Commission said Monday that it hoped to decide next week whether to open an inquiry into soaring imports of Chinese textiles and clothing. A probe could lead to the possible imposition of curbs, the EU’s executive said.

The Bush administration has launched an inquiry that also could lead to new curbs on Chinese textile and apparel imports.