China trade surplus is less than expected

China on Monday posted a record monthly trade surplus for October, but the total was smaller than expected, suggesting that policies to restrain exports and promote imports might finally be having an effect.

The figures will be a relief to the Chinese authorities, who are under growing pressure from the United States and the European Union to reduce the imbalance.

The surplus came in at $27.05 billion, surpassing the record of $26.9 billion set in June. It also topped September’s $23.9-billion surplus but was well below forecasts of $30 billion.

The final months of the year are usually busy ones for Chinese factories, but exports grew more slowly than imports for the first time since March.

“China has been trying to boost imports this year, and it’s time for these policies to start having an impact,” said Li Yushi, vice-director of a Ministry of Commerce think tank. “Of course, higher import prices, including oil, are also a reason.”

Exports in October grew 22.3% from a year earlier, with imports up 25.5%. Economists had expected export growth of 22.4%, with imports up 20%.

Beijing has cut or ended value-added tax refunds on a third of export categories and has put obstacles in the way of low-end industries that process imported raw materials and parts for re-export.

It has also let the yuan rise an additional 9.5% against the dollar since it was revalued by 2.1% in July 2005, when it also let the currency float within managed limits. The yuan reached a post-revaluation peak of 7.4108 per dollar Monday.

To the anger of the European Union, however, the yuan has fallen almost as much against the euro over the same period.