Bad timing. China’s trade surplus for April came in at a larger than expected $11.4 billion as exports surged and imports were lower than expected. Exports grew 29.9% year-on-year to $155.7 billion while imports rose 21.8% to $144.26 billion. The numbers were announced between days one and two of the latest round of the China-U.S. Strategic and Economic Dialogue being held in Washington. They will provide fresh ammunition for U.S. critics of China’s tight management of its currency and increase the pressure on Beijing to allow faster appreciation of the yuan. China’s defense, that it recorded its first quarterly deficit in seven years in the first three months of this year, will be overwhelmed, though the central bank has been allowing the yuan to rise as part of its own anti-inflation fight. What is complicating that for it is the fact that while the yuan has gained more than 2% agains the dollar in the past six months, it has lost ground against other leading currencies as the dollar has weakened.
Footnote: Note for the watch-list: does April’s weak imports number reflect a slowdown in the economy or a running down of inventories, particularly of price-spiked commodities?