Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

China Trade Surplus Hits Seven-Month High as Imports Slow

Containers are stacked at the Yangshan Deep Water Port in Shanghai. Photographer: Qilai Shen/Bloomberg
Containers are stacked at the Yangshan Deep Water Port in Shanghai. Photographer: Qilai Shen/Bloomberg

July 10 (Bloomberg) -- China’s trade surplus widened more than forecast to $22.3 billion in June, the highest level in seven months, as imports grew at the slowest pace since 2009.

The gap exceeded all the 21 estimates in a Bloomberg News survey of economists, with the median projection at $14.2 billion. The surplus was $13.1 billion the previous month and $20 billion a year earlier. The customs bureau released the data in an online webcast today.

The surplus adds to the cash flooding the economy and complicates Premier Wen Jiabao’s efforts to cool the fastest inflation in three years. Policy makers are seeking to rein in price gains that are stoking social discontent without choking off growth that’s already showing signs of slowing.

“We don’t think the PBOC will halt monetary tightening soon,” said Liu Li-Gang, head of Greater China economic research at Australia & New Zealand Banking Corp. in Hong Kong. The central bank will increase bill sales to soak up the extra liquidity from the trade surplus and prevent it from boosting money supply, he said.

The People’s Bank of China has raised interest rates five times since mid-October, the latest on July 5, and increased banks’ reserve requirements nine times since November to a record level to rein in liquidity. Consumer prices climbed 6.4 percent last month, the most in three years.

Growth Slowing

Liu said the central bank may need to raise reserve requirements further in the second half if trade surpluses are “persistently large” and will also need to increase benchmark rates as returns on savings are still below inflation.

A report on July 13 will show China’s gross domestic product advanced 9.3 percent in the second quarter from a year earlier, down from 9.7 percent in the first quarter, according to the median estimate in a Bloomberg News survey.

China’s trade surplus last month was the biggest this year and the widest June gap since 2007.

Exports climbed 17.9 percent, the least since December after excluding seasonal distortions from the Chinese New Year holiday, to a record $162 billion. Imports jumped 19.3 percent to $139.7 billion, the customs bureau said, the weakest expansion since gains resumed in November 2009 after a year-long decline.

Yuan Pressure

Analysts’ median forecasts were for an 18.6 percent gain in overseas shipments and a 25.3 percent increase in imports.

“The still-large trade surplus may add to yuan appreciation pressure in the short term, but faster gains may hurt export growth, which has been on track to slow down,” Shen Minggao, an economist with Citigroup Inc., said in a telephone interview. Slower import gains indicate the economy is cooling “but a hard landing is almost impossible, policies won’t be significantly relaxed in the second half,” he said.

Shen estimates the yuan will appreciate around 4 percent this year. U.S. officials and lawmakers from Treasury Secretary Timothy F. Geithner to New York Senator Charles Schumer have sought bigger gains in the yuan to help curb the bilateral trade gap.

China, the world’s biggest consumer of energy, iron ore and soybeans, has seen its import bill surge over the past year as commodity costs climbed.

Higher global prices are increasing inflationary pressure in China, and led to a 14.7 percent increase in the overall price of imported commodities in the first half, Zhao Fudi, a customs bureau spokesman, said in an online broadcast today.

Import Tariffs

Import growth in June was held back by a 12 percent drop in net crude oil shipments, the first year-on-year decline since December, customs data show. At the same time, the average cost of crude imports in June was $110 a barrel last month compared with $77 a year earlier, the data show.

The government is cutting duties to help ease the impact on imported inflation from surging commodity prices. The finance ministry said June 24 it would remove import tariffs on diesel and jet fuel and cut levies on gasoline, fuel oil, zinc and some blended cotton fabrics effective July 1.

Higher costs are crimping profit at oil refiners and steelmakers. Angang Steel Co. said July 8 its first-half net income may have dropped 92 percent because of the “significant” increase in the price of raw materials and fuel which “substantially exceeded” the increase in selling prices.

“China has to use currency gains to curb imported inflation,” Edmond Law, deputy head of foreign exchange at BWC Capital Markets in Hong Kong, said before today’s data. “Policy makers aren’t left with many monetary tools after the recent interest-rate hike.”

Sluggish Recovery

The yuan closed at 6.4650 per dollar in Shanghai on July 8. The currency touched 6.4599 on July 4, the strongest level since the country unified official and market exchange rates at the end of 1993. Non-deliverable forwards indicate a gain of about 1.3 percent against the dollar in the next 12 months.

Exports to the European Union and U.S., the two biggest trading partners, rose 16.9 percent in the first half, compared with overall export growth of 24 percent, Zheng Yuesheng, head of the customs bureau’s statistics department, said today. “The weak economic situation in main export markets has posed serious challenges to China’s efforts to maintain stable export growth.”

The U.S. unemployment rate unexpectedly climbed in June and employers added the fewest workers in nine months, a government report showed on July 8, posing a threat to consumer spending in the world’s biggest economy. The European Central Bank raised its benchmark interest rate on July 7 even as euro zone countries grapple with a worsening sovereign debt crisis.

Losing Competitiveness

China’s competitive advantage is also being tested by higher labor costs and yuan appreciation, Zheng from the customs bureau said today.

Companies including Nike Inc. are switching production to Asian countries where wages are lower, contributing to the moderation in export growth. Vietnam surpassed China last year to become the biggest supplier of footwear to the world’s largest sportswear company, according to its annual report.

China’s trade surplus in the first six months of the year dropped 18 percent from a year earlier to $44.9 billion, the bureau said today, the lowest in seven years.

The excess, which has fallen from a record $295 billion in 2008, may drop further to about $150 billion this year as slowing global demand affects exports, according to Wang Tao, a UBS AG economist.

To contact Bloomberg News staff on this story: Victoria Ruan in Beijing at

To contact the editor responsible for this story: Paul Panckhurst in Hong Kong at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.