China's surplus soars, clouding Hu's U.S. visit
China's surplus soars, clouding Hu's U.S. visit
HONG KONG China disclosed on Tuesday that its trade surplus surged to $11.19 billion in March, its second- highest monthly surplus ever and a level that could increase trade friction before President Hu Jintao's visit to the United States next week.
Soaring exports and slowing growth in imports caused the Chinese surplus to more than double compared with March 2005 and nearly eclipsed China's record monthly trade surplus of $12.02 billion, set in October.
The large surplus in March was especially significant because China usually has modest surpluses in the first quarter. During the second quarter, factories increase their shipments to the United States and Europe of everything from toys to DVD players, in preparation for the December retailing season.
Hu is scheduled to visit Seattle and then Washington during a four-day visit starting Tuesday, and China's trade and currency are likely to be important issues in the discussions. In Washington, the Treasury is in the final stages of deciding whether to accuse China of manipulating the value of its currency - keeping the yuan artificially cheap to maintain the competitiveness of Chinese exports, despite rising wages and raw material costs in China.
The yuan was at 8.0087 to the dollar in late afternoon trading in Shanghai on Tuesday, and it is widely expected by traders to push through the psychologically important level of 8 to the dollar in the next few days. China revalued the yuan by 2.1 percent against the dollar on July 21, and it has appreciated another 1.27 percent since then.
Larry Wortzel, chairman of the U.S.- China Economic and Security Review Commission, which was created by Congress to monitor and report on the bilateral relationship, said that the political impact of the latest trade figures might be limited. "It's a good time for them to release those numbers because Congress just went out on a two- week break, and domestically the nation is transfixed with immigration reform," he said.
Jing Ulrich, chairman of China equities at J.P. Morgan Securities (Asia Pacific), said the profitability of Chinese exporters had slumped in the past year because of higher costs for wages and materials together with the refusal of American retailers to pay higher prices. "There is a lot of pressure on Chinese manufacturers," she said.
China on Tuesday released only its totals for exports and imports and the trade balance during March, but it did not provide details of trade by country or by product. Exports rose 28.2 percent from a year earlier to $78.05 billion, while imports climbed 21.3 percent to $66.86 billion.
State-owned media in China have been strongly critical as the European Union and the United States have begun challenging Chinese trade policies, most recently by making preparations to file a challenge with the World Trade Organization to Chinese tariffs on imported auto parts. "It is not an overstatement to claim that the country has become the world's largest victim of protectionism," the official newspaper China Daily said Monday.
With the approach of Hu's visit, Chinese officials and state-owned media have been citing American restrictions on the export of technology with potential military applications as the reason for their bilateral deficits with the United States.
Karan Bhatia, a deputy U.S. trade representative who used to be the deputy under secretary of commerce responsible for administering the export control rules, denied in a telephone interview on Friday that the rules had a discernible effect on American exports to China.
The value of contracts blocked by the rules is "in the millions of dollars, not even the tens of millions," Bhatia said, adding, "This is as red a herring as they come."
Chinese textile and apparel exports have captured the greatest attention over the past year, mainly because China agreed to special rules when it joined the World Trade Organization in 2001 that have allowed the United States and the European Union to restrict Chinese exports of these goods, even after lifting their quotas on other countries' shipments at the start of last year.
But detailed Chinese trade data for the first two months of this year showed that Chinese exports were climbing briskly for a wide range of goods, with products like cellphones and televisions showing especially large percentage increases.
Because of differences in record keeping, China calculates that its exports to the United States exceed imports by three to one, while the United States puts the ratio at six to one.
HONG KONG China disclosed on Tuesday that its trade surplus surged to $11.19 billion in March, its second- highest monthly surplus ever and a level that could increase trade friction before President Hu Jintao's visit to the United States next week.
Soaring exports and slowing growth in imports caused the Chinese surplus to more than double compared with March 2005 and nearly eclipsed China's record monthly trade surplus of $12.02 billion, set in October.
The large surplus in March was especially significant because China usually has modest surpluses in the first quarter. During the second quarter, factories increase their shipments to the United States and Europe of everything from toys to DVD players, in preparation for the December retailing season.
Hu is scheduled to visit Seattle and then Washington during a four-day visit starting Tuesday, and China's trade and currency are likely to be important issues in the discussions. In Washington, the Treasury is in the final stages of deciding whether to accuse China of manipulating the value of its currency - keeping the yuan artificially cheap to maintain the competitiveness of Chinese exports, despite rising wages and raw material costs in China.
The yuan was at 8.0087 to the dollar in late afternoon trading in Shanghai on Tuesday, and it is widely expected by traders to push through the psychologically important level of 8 to the dollar in the next few days. China revalued the yuan by 2.1 percent against the dollar on July 21, and it has appreciated another 1.27 percent since then.
Larry Wortzel, chairman of the U.S.- China Economic and Security Review Commission, which was created by Congress to monitor and report on the bilateral relationship, said that the political impact of the latest trade figures might be limited. "It's a good time for them to release those numbers because Congress just went out on a two- week break, and domestically the nation is transfixed with immigration reform," he said.
Jing Ulrich, chairman of China equities at J.P. Morgan Securities (Asia Pacific), said the profitability of Chinese exporters had slumped in the past year because of higher costs for wages and materials together with the refusal of American retailers to pay higher prices. "There is a lot of pressure on Chinese manufacturers," she said.
China on Tuesday released only its totals for exports and imports and the trade balance during March, but it did not provide details of trade by country or by product. Exports rose 28.2 percent from a year earlier to $78.05 billion, while imports climbed 21.3 percent to $66.86 billion.
State-owned media in China have been strongly critical as the European Union and the United States have begun challenging Chinese trade policies, most recently by making preparations to file a challenge with the World Trade Organization to Chinese tariffs on imported auto parts. "It is not an overstatement to claim that the country has become the world's largest victim of protectionism," the official newspaper China Daily said Monday.
With the approach of Hu's visit, Chinese officials and state-owned media have been citing American restrictions on the export of technology with potential military applications as the reason for their bilateral deficits with the United States.
Karan Bhatia, a deputy U.S. trade representative who used to be the deputy under secretary of commerce responsible for administering the export control rules, denied in a telephone interview on Friday that the rules had a discernible effect on American exports to China.
The value of contracts blocked by the rules is "in the millions of dollars, not even the tens of millions," Bhatia said, adding, "This is as red a herring as they come."
Chinese textile and apparel exports have captured the greatest attention over the past year, mainly because China agreed to special rules when it joined the World Trade Organization in 2001 that have allowed the United States and the European Union to restrict Chinese exports of these goods, even after lifting their quotas on other countries' shipments at the start of last year.
But detailed Chinese trade data for the first two months of this year showed that Chinese exports were climbing briskly for a wide range of goods, with products like cellphones and televisions showing especially large percentage increases.
Because of differences in record keeping, China calculates that its exports to the United States exceed imports by three to one, while the United States puts the ratio at six to one.
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