China's trade surplus totaled $19.4 billion in January 2008 -- the first time the surplus has been below $20 billion in the last three months, The Associated Press reported Friday, citing the government's Xinhua News Agency. Exports rose 26.7% to $109.7 billion, while imports grew 27.6% to $90.2 billion.
U.S. consumer pullback?
"We may be starting to see the impact of the U.S. consumer pullback on China's exports to the U.S.," economist David H. Wang told BloggingStocks Friday. Wang was born and lived in China for more than twenty years before moving to the United States for graduate study. "If the U.S. economy continues in slow-growth mode, I suspect China's sales to the U.S. will continue to slow."
Wang said the declining Chinese trade surplus may take some pressure off China's government to move to a more-flexible exchange rate. China's existing currency framework -- a currency band -- undervalues the currency, keeping the price of its goods/service artificially low, which boosts exports. Some U.S. Congressional lawmakers are calling for punitive tariffs on Chinese goods if Beijing fails to act quickly to appreciate its currency.
"China's government may use this as a debating point with U.S. officials. They could argue 'Look, the trade surplus trend is moving in the right direction, so there's no need to act on currencies right now.' That may not be good enough for Congress, but given the many other issues on Congress' plate and the U.S.'s likely need for more investment capital from abroad, the United States may have to settle for that, at least for the time being," Wang said.
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Reader Comments (Page 1 of 1)
2-15-2008 @ 7:57PM
john said...
If the trade surplus is lower, maybe it's because the Chinese are not buying US treasuries or the like, and are doing real trade and buying US goods. Maybe we need to check the US capital accounts--because if you don't compare the two--the stats are meaningless. Sort of like--we all have a 100 percent trade deficit with Wal-Mart as Wal-Mart buys nothing from their consumers--but the money does go someplace else.
2-16-2008 @ 12:22AM
Kent said...
I agree with John's comment that invisible trade transactions(financial transactions) should be separated from goods/services sectors to better understand this downward trend in our trade surplus with China.