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CHINA / Foreign Media on China

China's trade surplus with US surged in March
By KEITH BRADSHER (The New York Times)
Updated: 2006-04-12 14:52

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.

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