May 10 (Bloomberg) -- China reported a trade surplus that was more than three times larger than forecast in April as exports surged to a record, bolstering the U.S. 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 percent to $156 billion while import growth slowed to 22 percent, 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. U.S. 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.”
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 U.S. and Chinese officials in Washington. The currency was 0.02 percent higher at 6.4930 at 3:42 p.m. in Shanghai.
The People’s Bank of China allowed the currency to strengthen 0.9 percent in April, the biggest monthly gain this year.
Stocks climbed after the report. The benchmark Shanghai Composite Index rose 0.6 percent to 2,890.63 at the 3 p.m. close, the most in five days.
Consumer prices rose 5.4 percent in March, the most in 32 months, and may have climbed 5.2 percent in April, according to the median estimate in a Bloomberg News survey. The statistics bureau will release inflation data in Beijing tomorrow.
China, the world’s biggest consumer of copper, iron ore and soybeans, has seen its import bill surge over the past year as prices of commodities climbed, contributing to the nation’s first quarterly trade deficit since 2004 in the January-to-March period.
Australia today reported a trade surplus for March on growing exports of iron ore and coal.
Higher prices and government policies to cool the economy may have deterred China’s purchases last month. Premier Wen Jiabao has clamped down on lending, imposed limits on home sales and curbed expansion in some industries.
Imports of iron ore by volume dropped 11 percent in April from the previous month and 4.4 percent from a year earlier, the customs bureau said today. Crude oil shipments fell 0.6 percent in April from the previous month and natural-rubber imports dropped 14 percent from March as slower growth in vehicle sales crimped demand from tire makers.
Sales of passenger cars to dealerships rose 2.8 percent in April from a year earlier to 1.14 million, down from a 33 percent gain in the same month in 2010, the China Association of Automobile Manufacturers said today.
The worst weekly plunge in commodities prices since December 2008 last week, including a 15 percent decline in oil, may help ease inflation pressure in China.
“The price factors that have boosted the import bill recently are expected to ease markedly due to the recent sharp correction in global commodity prices,” said Ma Jun, chief China economist at Deutsche Bank AG.
Export growth was in line with the median estimate in a survey of 29 economists.
“Exports will do quite well this year mostly related to the rebound in the U.S. and European economies and also because the effect of the Japan earthquake isn’t that great,” said Alaistair Chan, a Sydney-based economist with Moody’s Economy.com, who had the most accurate forecast for the trade surplus.
Companies benefiting from the nation’s trade gains this year include Cosco Pacific Ltd., part of China’s largest shipping group. Cosco said it more than doubled first-quarter profit, helped by a 20 percent increase in throughput at its container terminals after it added facilities to cope with rising exports of toys, furniture and auto parts to the U.S. and Europe.
Excluding data from February, when the lunar new year holiday distorted import growth, the increase in inbound shipments was the smallest annual gain since October 2009 and compared with the 29 percent median estimate in a Bloomberg survey.
The slowdown “reflects the effects of domestic policy tightening on domestic demand as well as lower import price growth,” said Yu Song, a Beijing-based economist with Goldman Sachs Group Inc. “The trade surplus will remain at a relatively high level in the coming months amid continued domestic policy tightening.”
At the start of the two-day Strategic and Economic Dialogue yesterday, Geithner said China has been making progress “towards a more flexible exchange rate” and weaning its economy off a dependence on exports.
Still, Senator Sherrod Brown, a Democrat from Ohio, urged the U.S. administration to press China on the currency issue and also said Congress should pass legislation to protect American workers from an undervalued yuan. Brown and Senator Olympia Snowe, a Republican from Maine, have proposed a measure to allow additional sanctions to address currency issues.
China argues that its currency is not a key cause of global economic imbalances, and highlights the role of U.S. restrictions on Chinese purchases of high-technology products in lopsided trade between the two nations.
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