China's surging economy showed no signs of slowing yesterday despite recent cooling measures, with official data showing the trade surplus hit a record high and inflation picked up last month.
China's trade surplus reached US$13 billion last month and US$46.79 billion for the first five months of the year, a customs administration statement said.
Last month's performance was sharply higher than the surplus of US$10.46 billion recorded in April and set the nation on course to surpass last year's record surplus of US$101.9 billion.
Meanwhile, the government said the consumer inflation index rose 1.4 percent last month compared with a year earlier, following a gain of 1.2 percent in April and 0.8 percent in March.
Analysts said the figures were a further sign that China's economy was continuing to steam ahead after growing at 10.3 percent in the first quarter, with recent measures aimed at preventing overheating yet to take effect.
"China's economy needs to take some time to slow down," Beijing-based BNP Paribas Peregrine economist Chen Xingdong (
Chief among those policies were an interest rate rise on April 27 -- the first in 18 months -- and a separate package of measures last month that were aimed at slowing investment in the overheated property sector.
"All the policies are in place," Chen said, but emphasized the problem lay with the local governments' willingness to curb growth by implementing the central authorities' orders.
Shanghai-based senior economist for Standard Chartered Bank Stephen Green agreed there would be an inevitable lag in the effects of the policies, but cautioned that yesterday's data appeared to indicate more needed to be done.
Green said the trade and inflation numbers backed up reports in the state-run press last week showing money supply had jumped last month while bank loan growth had nearly doubled year-on-year.
"This is all likely to create much discomfort for the PBoC [People's Bank of China]," Green said.
Meanwhile, economists said the rise in the trade surplus would further add to tensions with the US and increase pressure on Beijing to take more dramatic action in allowing the yuan to appreciate.
The US has been the harshest critic of Beijing's managed currency system, arguing that the yuan is undervalued by as much as 40 percent which gives Chinese exporters an enormous trade advantage.
"The trade surplus [for last month] is quite high, much higher than we had expected," said Shen Minggao (
"If China's trade surplus continues to surge and sets new records all the time, the [external] pressure will rise. The government itself will also have problems to convince its trade partners that we are doing something," Shen said.
DBS economist Chris Leung (
"But this is not what the US is aiming at. They want a stronger renminbi [yuan]," Leung said.
In July last year, under intense pressure from the US, China revalued the yuan by 2.1 percent against the dollar and replaced its pegged currency system to the US unit with a basket of currencies.
The yuan was also allowed to move 0.3 percent either way against the dollar on a daily basis but the currency has not appreciated markedly since then. The yuan was valued at 8.01 to the dollar yesterday.
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