China export growth slows in March
China’s export juggernaut slowed sharply in March, but analysts doubted that the surprising results would ease mounting trade tensions with the United States.
China reported Tuesday that its trade surplus with the rest of the world came in at $6.9 billion last month, about one-third of most analysts’ forecasts. The nation’s exports rose by 6.9% in March over a year earlier -- the lowest growth rate in five years -- while imports grew by 14.5%.
The report by China’s customs administration was issued about 12 hours after the Bush administration ratcheted up pressure on Beijing by announcing that it would file cases with the World Trade Organization over counterfeiting of U.S. intellectual property and alleged trade barriers involving media and books. The U.S. recorded a $232-billion trade deficit with China last year.
China’s government Tuesday expressed “great regret and strong dissatisfaction” at the U.S. move.
“The decision runs contrary to the consensus between the leaders of the two nations about strengthening bilateral trade ties and properly solving trade disputes,” said Wang Xinpei, a Ministry of Commerce spokesman. “It will seriously undermine the cooperative relations the two nations have established in the field and will adversely affect bilateral trade.”
Chinese officials, pointing to the March data, said China’s overall balance of trade would gradually improve. But analysts agreed that last month’s figures were an anomaly, because of an unusual burst of exports in the previous two months or because of statistical aberrations.
Even with the March slowdown, China’s trade surplus with the world totaled $46.5 billion in the first quarter -- twice as much as in the first quarter of 2006. China’s exports in the January-March period surged by 28% from a year earlier, and imports increased by 18%.
For the first quarter, China’s trade surplus with the U.S. stood at $34.7 billion, according to China customs’ data.
The March report “will do nothing, zilch, nada, to address political concerns in the U.S. about China’s overall trade surplus,” said Stephen Green, senior economist at Standard Chartered Bank in Shanghai.
In the face of intensified criticisms from the U.S. and Europe, which also is running a large trade deficit with China, Beijing has taken some steps to cool the pace of exports and bolster imports. Chinese officials have tried to slow down bank lending for new factories in certain industries while lifting import controls on commodity products and pledging to introduce policies to boost high-tech and machinery imports.
But nobody expects a swift change given the size and momentum of China’s economy, now the world’s fourth-largest.
The central government has been reluctant to impose measures, such as abolishing tax rebates for garment exports, that could hurt major industries providing livelihoods for millions. Local officials, meanwhile, have turned a blind eye to rampant building of factories churning out steel and iron that boost economic development and government revenues.
In the first quarter, Chinese exports of raw steel and steel products surged 150% from a year earlier to $10 billion, customs data show. Shipments of computers jumped 43% to $28.3 billion. Garment exports rose 18% to $20.2 billion. The biggest gains in imports were raw materials, such as copper, iron ore and plastics.
“I think the American people can understand that the trade surplus is caused by structural problems of the economy,” said Li Wei, director of American studies at the Chinese Academy of International Trade and Economic Cooperation in Beijing, which is affiliated with the Ministry of Commerce. “How could the trade surplus be pressed down overnight?”
Until recently, the Bush administration had generally taken a softer approach to reduce the deficit with China, focusing on prodding their Chinese counterparts to loosen control of the currency, which many believe is undervalued and gives Chinese exporters an unfair advantage. But in February, the administration filed a WTO case over China’s alleged illegal government subsidies and last month threatened to seek higher tariffs on certain Chinese imports.
Next month, a Chinese delegation will come to Washington for another round of the “strategic economic dialogue” started by U.S. Treasury Secretary Henry M. Paulson Jr. In a goodwill gesture, Wu Yi, China’s vice premier, is expected to announce a major purchase of American goods.
*
