China
China's trade surplus jumped more than economists estimated in January, a sign that the world's fourth-biggest economy may keep powering global growth as a recession looms in the U.S.
The gap widened 23 percent from a year earlier to $19.5 billion, the customs bureau said on its Web site today. That was more than the $17 billion median estimate of 19 economists surveyed by Bloomberg News.
Overseas sales grew at the fastest pace in six months as higher export taxes and an appreciating yuan failed to damp demand. International Monetary Fund Managing Director Dominique Strauss-Kahn today reaffirmed a forecast that China's economy will expand 10 percent this year amid a spreading financial crisis sparked by the U.S. housing slump.
“Global demand is holding up reasonably well,'' said David Cohen, an economist at Action Economics in Singapore. “The growth momentum in China's economy is sufficient to help balance out whatever is happening in the U.S.''
Exports rose 26.7 percent from a year earlier to $109.7 billion. Imports increased 27.6 percent, the largest gain in almost two years, to $90.2 billion.
China and the U.S. were the biggest contributors to global growth last year. Former Federal Reserve Chairman Alan Greenspan says the U.S. economy is on the verge of its first recession in six years.
Yuan, Trade Tensions
The widening trade gap may stoke tensions with the U.S. and Europe over claims the yuan is undervalued. Inflows of export cash increase pressure on the central bank to allow faster currency gains to curb inflation that's close to an 11-year high.
The yuan has gained 1.5 percent this year versus the dollar after rising 7 percent in all of 2007, pushing up the cost of exports and lowering import prices. It climbed 0.1 percent today to close at 7.1825 per dollar, the strongest since a fixed exchange rate ended in July 2005.
“This shows that government export curbs are not having much effect,'' said Liao Qun, chief economist at Citic Ka Wah Bank in Hong Kong. “Trade disputes between China and the U.S. will intensify.''
It was the second sign this week of Asian economies providing a counter-balance to problems rippling out from the U.S cash advance in one hour. economy. Japan, the world's second-largest economy, reported an acceleration in fourth-quarter growth to twice the pace economists forecast.
Lunar New Year
China's biggest annual holiday, Lunar New Year, may have helped to boost the increase in the trade surplus because it started earlier in February this year than it did last year.
“Exporters were pushing to get stuff out the door,'' said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. “February exports will be lower.''
Exports of machinery and electronics rose 28 percent in January from a year earlier to $62.2 billion, accounting for 57 percent of shipments.
The surplus was less than December's $22.7 billion because fourth-quarter export volumes are swelled by Christmas shipments. The trade gap widened 48 percent in all of 2007 from a year earlier to a record $262 billion.
The IMF last month cut its forecast for global growth this year to the slowest pace since 2003 as tighter access to credit in the U.S. weighs on other assets and economies. The world economy will expand 4.1 percent, down from 4.9 percent in 2007 and below the 4.4 percent pace projected in October, according to the IMF.
`Crisis' Spreading
“The current financial crisis, which began in the United States housing market, is spreading to affect the real economy in the U.S. and elsewhere,'' Strauss-Kahn told reporters in Beijing today. “It's even more necessary than before to have high growth in China.''
Growth in the U.S., the world's biggest economy, slowed to 2.5 percent in the fourth quarter from 2.8 percent in the previous three months.
The U.S. trade deficit narrowed in December partly because of slower gains by Chinese exporters, the U.S. Commerce Department reported yesterday.
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