China said Wednesday that its trade surplus with
the rest of the world had leapt to a record US$23.8b in October, the latest
sign of this country's phenomenal rise as a trading superpower.
The surplus, which blew past the previous record of $18.8 billion set in
August, is almost certain to add to longstanding trade frictions with the United
States and the European Union and lead to renewed calls for China to allow its
currency to appreciate at a faster pace.
For the last few years, the Chinese economy has been growing at a blistering
pace -- as high as 10 percent. Its factory floors are pumping out millions of
toys, textiles, DVD players and laptop computers.
In the first nine months of this year, China says it has racked up a $133
billion surplus with the rest of the world, primarily with the United States and
the European Union. In all of last year, China reported a record $101 billion
Indeed, China's surplus for the month of October was almost as big as its
surplus for the entire year of 2004, which was $25.5 billion.
Economists were surprised at the size of the October gain, which has come
after months of government efforts to slow the economy and trim the surplus in
hopes of easing trade frictions.
"This is obviously going to raise eyebrows," said Dong Tao, an economist at
Credit Suisse in Hong Kong. "And so we may now have more talk about currency
The Chinese government did not release precise details of the monthly
surplus, but it said that in October exports rose 29.6 percent, to $88.1
billion, while imports climbed just 14.7 percent, a slowing from September.
Stephen Green, an economist at Standard Chartered Bank, said that the real
surprise was the weakness in imports, which came despite a rise in oil imports.
"This is not being driven by them selling more, it's being driven by them
buying less," he said. "It's all a bit strange."
He said the government began its efforts to slow both the economy and
overheated investment in the summer, but imports remained strong. And Beijing
has let the currency appreciate modestly, which would encourage purchasing goods
from the rest of the world.
Some experts believe that Chinese buyers are putting off purchases because of
the government efforts, and investments in new factories could be slowing
because those efforts are just beginning to be reflected in the figures.
But exports to the United States and Europe continued to grow at a fast pace.
According to the Chinese government, China has already racked up a $116
billion surplus with the United States this year. But the United States
government, because it calculates its trade figures differently, often shows
much bigger gains for China.
Many economists doubt the situation can be easily addressed by trade
negotiations or by pressuring China to revalue its currency.
"This is the reality," said Mr. Tao, the Credit Suisse economist.
"Structurally China is the world's factory floor. Two, everyone expected
American demand to slow down, and it hasn't. And third, China needs to ease its
He added: "Nothing is going to change overnight, so sit back and fasten your
seat belts. This big surplus is not going to go away anytime soon."
Courtesy of The New York Times