China posts bigger than forecast trade surplus

China reported a trade surplus that was more than three times larger than forecast in April as exports surged to a record, bolstering the US case for faster yuan gains as officials from both nations meet for annual talks in Washington.

The surplus widened to $11.4 billion and exceeded the forecasts of all 27 economists in a Bloomberg News survey. Exports climbed 30 per cent to $156 billion while import growth slowed to 22 per cent, the customs bureau said today.

The rebound in China’s surplus to its highest this year may add pressure on the world’s biggest exporter and holder of foreign-exchange reserves to address imbalances and reduce inflation through steeper yuan appreciation. US Treasury Secretary Timothy F Geithner and Chinese Vice Premier Wang Qishan pledged yesterday to tackle currency conflicts between the world’s biggest economies.

“This number will likely add to the pressure from Washington for Beijing to allow faster currency appreciation,” said Brian Jackson, a Hong Kong-based strategist with Royal Bank of Canada. “But more importantly it should persuade Chinese policy makers that a stronger yuan can be tolerated by the economy and is warranted as part of their efforts to curb price pressures.”

RECORD YUAN
The trade surplus compared with $140 million in March and the $3.2 billion in the Bloomberg News survey.

China’s central bank set the yuan’s reference rate at 6.495 per dollar, a record high for the third day ahead of the final day of an annual economic meeting between US and Chinese officials in Washington. The currency was 0.02 per cent higher at 6.4930 at 3.42 pm in Shanghai.

The People’s Bank of China (PBOC) allowed the currency to strengthen 0.9 per cent in April, the biggest monthly gain this year. Stocks climbed after the report. The benchmark Shanghai Composite Index rose 0.6 per cent to 2,890.63 at the 3 pm close, the most in five days.