China finds relief in smaller trade surplus | business | Hindustan Times
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China finds relief in smaller trade surplus

business Updated: Feb 14, 2011 10:35 IST

China's trade surplus fell more than expected in January for the second straight month, supporting the government's case that it is doing enough to spur domestic demand without speeding up currency appreciation.

A weaker surplus in the past would have caused concern, but China has been trying to shift its economy towards greater reliance on consumption and less on exports, in part to address critics who say that its success has come at the expense of other countries.

Although two consecutive months of declining trade inflows hardly mark a definitive change, they do provide an important symbolic lift to China ahead of a G20 meeting this week of finance ministers from the world's biggest developed and developing economies.

China exports grew 37.7% in January from a year earlier, and imports rose 51%, state television said on Monday. That left the country with a trade surplus of $6.5 billion, compared with $13.1 billion in December.

The median forecast of economists polled last week was for exports to rise 22.4% in January and imports to grow 28 percent, resulting in a trade surplus of $10.7 billion.

Along with serving as a signal of economic rebalancing, the smaller trade surplus also means that less money is rushing into China, easing the upward pressure on prices that has pushed inflation to its fastest in more than two years.

China will report its January inflation data on Tuesday. Analysts polled had expected prices to rise 5.3% in the year to January, a 30-month high, but traders said on Monday that the increase was likely to be 4.9%, because adjustments of the consumer price index will have reduced the weight given to fast-rising food prices.