May 12 (Bloomberg) -- China posted a larger-than-expected $10.5 billion April trade surplus, providing ammunition for U.S. lawmakers seeking sanctions against the nation for failing to let its currency appreciate faster.
The surplus compares with the $7.2 billion median estimate of 21 economists in a Bloomberg survey and $11.2 billion in March. Imports rose 15.3 percent from a year earlier, the least since July, and exports jumped 23.9 percent, the customs bureau said on its Web site today.
U.S. lawmakers from both parties lambasted President George W. Bush this week after the Treasury Department stopped short of saying China manipulates its currency to make exports more competitive. China's leaders say they prefer to encourage imports to reduce the surplus because faster currency gains would upset the economy, which grew 10.2 percent in the first quarter.
``With all the criticism that China isn't doing enough to address global imbalances, these figures are going to ensure political pressure remains strong,'' said Tai Hui, an economist at Standard Chartered Bank Plc in Hong Kong.
China's trade surplus in April widened from $4.42 billion in the year-earlier month, and takes the total for the first four months to $33.7 billion, up from $20 billion a year earlier. The 2006 surplus will likely top last year's record $102 billion, said JPMorgan & Chase Co. economist Grace Ng in a research note today.
Imports rose to $66.5 billion as growth lagged the median 23.8 percent estimate in the survey. Oil imports rose 17 percent by value, slowing from a 75 percent increase in the first quarter. Exports jumped to $77 billion, the second-highest on record.
Treasury Report
U.S. Senators Charles Schumer, a New York Democrat, and Lindsey Graham, a South Carolina Republican, blame an artificially weak Chinese currency for a $201.6 billion trade deficit with the Asian nation last year. Their proposal of a 27.5 percent tariff on Chinese imports unless the yuan is allowed to strengthen is among more than a dozen measures that target China before November congressional elections.
China's yuan has gained 1.3 percent against the dollar since China on July 21 revalued it by 2.1 percent and ended a decade- long peg to the dollar. The currency traded at 8.0082 per dollar at 10:45 a.m. in Shanghai, weakening from 8.0039 yesterday, according to data compiled by Bloomberg. It may strengthen to 7.8 to the dollar in a year, said Carlos Cheung, chief currency dealer at Bank of East Asia Ltd.
``We're unhappy with the pace of change,'' the Treasury's Undersecretary for International Affairs Tim Adams said in an interview in Washington yesterday. The U.S. will press China ``every day'' for greater flexibility in the yuan.
U.S. Deficit
The U.S. trade deficit probably widened to $67 billion in March, the third-largest ever, a survey of economists showed. The report is due later today.
In its semiannual report on the practices of U.S. trading partners, the Treasury avoided naming China as a currency manipulator, opting instead to criticize the nation for not having made enough progress on exchange rate flexibility.
The decision was condemned by both Democratic and Republican lawmakers, some of whom pledged to press ahead with legislation to widen duties on Chinese imports.
China is taking steps to reduce the trade surplus, government officials have said, emphasizing that stronger domestic demand would play a bigger role in narrowing the gap than a rising yuan.
``The trade surplus reflects structural imbalances in China's economy and that's not a good thing,'' said Julian Jessop, chief international economist at Capital Economics in London. ``But there is no conceivable currency move that's going to have a meaningful impact on the trade numbers, at least in the short term.''
`Implications For Everything'
The government will help resolve trade imbalances by increasing consumption and opening its markets rather than by quick currency appreciation, which could hurt the economy, Vice Finance Minister Li Yong said on May 4.
Moving too fast on the yuan would ``have implications for our exports, imports, agriculture, industry and everything,'' Li said.
Premier Wen Jiabao has pledged to boost spending on health care, welfare and education to ease the financial burden on the nation's 1.3 billion people and encourage them to consume. The government has cut taxes and raised minimum wages.
The World Bank, the International Monetary Fund, the World Trade Organization and the Group of Seven in the past month urged China to make its exchange rate system more flexible to reduce its dependence on exports for growth.
``Accelerating the pace of appreciation would help reduce the current account surplus, help to rebalance growth away from exports and toward domestic demand,'' Louis Kuijs, senior economist at the World Bank in Beijing said on May 10 at the launch of the bank's quarterly report on China.
Faster yuan gains would also help curtail inflation by making imports cheaper, said economist David Cohen at Action Economics in Singapore. Inflation in China accelerated to 1.2 percent in April from 0.8 percent the month before as food, fuel and utilities costs increased, a separate report showed today.
