MercoPress. South Atlantic News Agency

China’s trade surplus drops considerably in January ahead of G-20 meeting

Imports soared 51% during January

China's trade surplus fell to its lowest in nine months in January after imports surged, supporting the government's case ahead of a G20 meeting that it is doing enough to spur domestic demand without speeding up currency appreciation.

The trade surplus shrank to 6.5 billion from 13.1 billion US dollars in December, well short of forecasts for a 10.7 billion gap.

In the past, a weaker surplus would have caused concern in Beijing but more recently it has been trying to shift the economy toward greater reliance on consumption and less on exports, in part to address critics who say that its success has come at the expense of massive exports to other countries supported on a “cheap” Yuan.

It was the third consecutive month of a declining trade surplus, and though not enough to mark a definitive change, that streak provides a symbolic boost to China before the G20 meeting this week of finance ministers from the world's biggest developed and developing economies.

The G20 meeting in Paris on Feb 18-19 will try to elaborate a plan for tackling the global economic imbalances that exacerbated and, some say, helped trigger the financial crisis in 2008,.

China’s imports increased 51% in January from a year earlier, blowing past market forecasts for a 28% rise. Exports rose 37.7% in January, topping expectations for a 22.4% rise, the customs administration said.

Commodity-exporting countries were the clear beneficiaries of the new tendency. Imports from South Africa were up 212.5% year on year, while shipments from Canada and Brazil were up 146.7% and 95.4%.

But economists also cautioned against reading too much into the January data, because trade performance was probably affected by the Chinese New Year. It fell earlier in 2011 than in 2010, leading firms to rush to make shipments and order goods in the final weeks of January before the holiday.

Along with serving as a signal of economic rebalancing, a 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 rate in more than two years.

China’s inflation data is due on Tuesday and it is anticipated that the index will be lower than the December 30-month high, because adjustments of the consumer price index will have reduced the weight given to fast-rising food prices.