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Chinese Exports Hit Record for April

104 Reads | 0 Comments | Posted on May 10, 2011
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Chinese Exports Hit Record for April
 

HONG KONG — China’s exports surged last month to a record level, as Chinese factories appear to have passed on rising costs to buyers who are finding that they have few alternatives in other countries.

China’s imports lagged, causing its trade surplus to widen sharply from the first three months of this year, to $11.43 billion. That was lower than last year, but still high enough to increase trade frictions with the United States and other countries worried that China is using a weak currency to claim an unusually large share of global job creation as the world economy climbs out of the recent economic downturn.

China’s regular release of trade statistics came between two days of negotiations in Washington between senior American and Chinese officials. In the first day of talks on Monday, American officials pressed China to improve its human rights record and allow interest rates and the Chinese currency to rise, while Chinese officials called on the United States to lead a global economic recovery and suggested that their shrinking trade surplus should not be a big concern.

The average price of goods imported from China to the United States, adjusted for quality improvements, jumped 0.4 percent in April from the previous month and was up 2.8 percent from a year earlier, the Bureau of Labor Statistics announced Tuesday morning in Washington.

The import price statistics were the latest confirmation that China is becoming a contributor to higher prices in the United States. That comes after many years in which the price of Chinese goods was flat or falling, which tended to limit American inflation over all, by making it hard for other businesses to raise prices.

But the direct role of Chinese imports in the American economy is still fairly limited. Although they account for one-fifth of total imports, they equaled only 2.5 percent of economic output in the United States last year.

The newest data from China indicates its trade surplus essentially disappeared in the first three months of this year. Rising commodity prices  drove up the cost of China’s imports,  while exports tend to be weak early in  the year, partly because of factory shutdowns that last one to three weeks for  Chinese New Year.  

China is trying to shift from an export-led model for growth to an economic  model giving primacy to domestic consumption. But Ben Simpfendorfer, the  managing director of China Insider, an  economics newsletter, said that it had  been premature for some to suggest recently that the country’s overall trade  surplus was already disappearing.  

“It will happen, but not for at least another two years,” he wrote in an e-mail.  “Only half of China’s imports are related to domestic demand, so they have  to grow at twice the rate of exports in order to reduce the trade surplus. That’s a  daunting challenge, even for China.”  

The long-term trends also offer little solace for American officials. Chinese  exports to the United States actually  grew faster last month than imports  from the United States. Rising Chinese  imports tend to be in categories like oil  from the Mideast as well as luxury  goods and sophisticated machinery  from Europe.

China’s General Administration of Customs said that exports rose 25.9 percent in April compared with a year earlier, to a record $155.69 billion, exceeding a previous record of $154.12 billion in December. The increase was somewhat surprising because the spring is traditionally a weak period for Chinese exports, before  large quantities of goods start to be  shipped over the summer for the Christmas shopping season.

Chinese imports rose at a slower 21.8 percent, to $144.26 billion, as government policies took effect to restrict bank lending in an attempt to control inflation. Japan accounts for about one-eighth of China’s imports, and these  shipments barely increased from a year  earlier, dragging down the overall total  as the earthquake off northeast Japan  triggered rolling electricity blackouts  and parts shortages that disrupted the  manufacture of cars and many other  products.

Labor costs are surging by 10 to 30 percent a year in China and commodity costs are rising around the world, leading to warnings by suppliers of Western retailers that price tags will start rising globally. Many companies are searching for alternatives to manufacturing in China, but finding that nowhere else offers China’s combination of a large labor supply, world-class highways and ports and strongly pro-business policies, including a strict ban on independent labor unions that tended to hold down wages until very recently.

Josh Green, the chief executive of Panjiva, a New York company that advises 3,000 corporate buyers of goods from Asia, said his clients were extremely worried about the pace of price increases that they face from Chinese suppliers.

“That’s all I’ve been hearing from them over the past year, is concern verging on panic about the changing cost structure in China,” he said. “That has led to the hunt for the next China, which is a fool’s errand.”

Executives at three Chinese exporters said Tuesday that despite strong retail sales in the United States in April, they had not yet seen a sustained uptick in American orders, even as orders have risen from Europe and emerging markets. One reason might be that these and other exporters are now steadily marking up their prices to reflect the gradual appreciation of the renminbi, which has climbed 5 percent against the dollar since last summer.

“I am not worried about the rise of the renminbi since our company makes an adjustment every three months in the exchange rate used in our contracts,” said Mabel Lee, the sales manager at the Foshan Summit Sanitary Ware Company, a maker of bathtubs and toilets based in Foshan, in Guangdong Province in southern China.

  The Shanghai composite index climbed after the release of the trade  data on Tuesday morning, and closed  with a gain of 0.63 percent. The stock  market in Hong Kong was closed because of a public holiday in honor of  Buddha’s birthday.

Hilda Wang contributed reporting.

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