China disclosed Tuesday that its trade surplus surged to $11.19 billion in
March, its second-highest monthly surplus ever and a level that could feed trade
frictions in advance of President Hu Jintao's visit to the United States next
week.
The surplus more than doubled over March of last year on soaring exports and
slowing growth in imports, and nearly matched China's record monthly trade
surplus of $12.02 billion, set last October.
The March figures were especially significant because China usually runs only
modest surpluses or even deficits in the first quarter. In the second quarter,
factories step up their shipments to the United States and Europe of things like
toys and DVD players, in preparation for the holiday retail season.
President Hu is scheduled to visit Seattle and then Washington during a
four-day visit starting April 18, and China's trade and currency are likely to
be issues. The visit was a factor in China's agreement, announced Tuesday, to
crack down on copyright piracy of American computer programs and to lift a ban
on American beef.
The Bush administration said the Chinese pledged to require that computers
use legal software and to close optical disk plants that are producing pirated
CD's and DVD's.
In Washington, the Treasury Department is in the final stages of deciding
whether to accuse China of manipulating the value of its currency — keeping the
yuan artificially cheap to maintain the competitiveness of Chinese exports
despite rising wages and raw material costs in China.
The yuan was trading at 8.0087 to the dollar in late-afternoon trading in
Shanghai on Tuesday, and is widely expected by traders to ease through the
psychologically important level of 8. China revalued the yuan by 2.1 percent
against the dollar last July 21, and it has appreciated an additional 1.27
percent since then.
Larry M. Wortzel, the chairman of the United States-China Economic and
Security Review Commission, which was created by Congress to monitor and report
on the bilateral relationship, said that the political impact of the latest
trade figures might be limited. "It's a good time for them to release those
numbers because Congress just went out on a two-week break, and domestically the
nation is transfixed with immigration reform," he said.
Jing Ulrich, the chairwoman of China equities at J. P. Morgan Securities
(Asia Pacific), said the profitability of Chinese exporters had slumped in the
last year because of higher costs for wages and materials together with the
refusal of American retailers to pay higher prices. "There is a lot of pressure
on Chinese manufacturers," she said.
Exports rose 28.2 percent from a year earlier, to $78.05 billion, while
imports climbed 21.3 percent, to $66.86 billion.
Mmedia in China have been strongly critical as the European Union and the
United States have stepped up their criticisms of Chinese trade policies, most
recently by making preparations to file with the World Trade Organization a
challenge to Chinese tariffs on imported auto parts. "It is not an overstatement
to claim that the country has become the world's largest victim of
protectionism," the official China Daily newspaper said on Monday.
With the approach of President Hu's visit, Chinese officials and media have
been blaming American restrictions on the export of technology with potential
military applications for their country's bilateral deficits with the United
States.
Karan K. Bhatia, a deputy United States trade representative who used to be
the deputy under secretary of commerce responsible for administering the export
control rules, denied in a telephone interview on Friday that the rules had a
discernible effect on American exports to China.
The value of contracts blocked by the rules is "in the millions of dollars,
not even the tens of millions," he said, adding that, "This is as red a herring
as they come."
Chinese textile and apparel exports have captured the greatest attention over
the last year, mainly because China agreed to special rules when it joined the
World Trade Organization in 2001. Those rules have allowed the United States and
the European Union to restrict their imports of Chinese goods even though quotas
on other countries' shipments were lifted at the start of last year.
But detailed Chinese trade data for the first two months of this year showed
that Chinese exports were climbing briskly for a wide range of goods, with
cellphones and television sets showing especially large percentage increases.
Because of differences in recordkeeping, China calculates that its exports to
the United States exceed imports by three to one, while the United States puts
the ratio at six to one.