China March trade surplus leaps to $11.2 billion

BEIJING, Apr 11 (Reuters) China's trade surplus soared in March, handing fresh ammunition to critics of Beijing's currency and trade policies just days before President Hu Jintao leaves for talks in Washington with President George W. Bush.

The surplus jumped to .2 billion from BEIJING, Apr 11 (Reuters) China's trade surplus soared in March, handing fresh ammunition to critics of Beijing's currency and trade policies just days before President Hu Jintao leaves for talks in Washington with President George W. Bush.

The surplus jumped to $11.2 billion from $2.45 billion in February and $5.7 billion in March 2005, the Ministry of Commerce said on Tuesday.

Economists polled by Reuters had expected a surplus of $5.4 billion based on projected export growth of 22 percent and import growth of 25 percent.

In the event, exports rose 28.3 percent from a year earlier to $78.05 billion, while imports rose 21.1 percent to $66.86 billion.

The surplus, the highest since October, was especially striking because the first quarter of the year is normally the weakest for Chinese exporters.

The January-March surplus came to $23.3 billion, up 41.4 percent from a year earlier.

''The first quarter is as small as the trade surplus should get.

Inevitably it can only get bigger from here. It puts a lot of pressure on Beijing ahead of Hu's visit,'' said Ben Simpfendorfer, a strategist with Royal Bank of Scotland in Hong Kong.

Song Guoqing, chief economist at China Stock Exchange Executive Council, a Beijing think-tank, agreed that the figures would increase pressure on China ahead of Hu's talks with Bush on April 20.

''The full-year trade surplus is likely to reach $100 billion this year, which means that the pace of the yuan's appreciation should be faster,'' Song said.

The yuan has risen just 1.25 percent since it was revalued by 2.1 percent in July and cut free from a decade-old dollar peg to float within managed bands.

The surplus last year tripled to $102 billion and many economists had been expecting a modest fall in 2006.

But Gao Shanwen, chief analyst at Everbright Securities in Shanghai, said it was clear that the strong momentum from 2005 had carried over into the new year.

''I expect the trend of rapid growth in the surplus will continue, with the whole-year surplus between $120 billion and $140 billion,'' he said.

REUTERS CS GC1508 .45 billion in February and .7 billion in March 2005, the Ministry of Commerce said on Tuesday.

Economists polled by Reuters had expected a surplus of .4 billion based on projected export growth of 22 percent and import growth of 25 percent.

In the event, exports rose 28.3 percent from a year earlier to .05 billion, while imports rose 21.1 percent to .86 billion.

The surplus, the highest since October, was especially striking because the first quarter of the year is normally the weakest for Chinese exporters.

The January-March surplus came to .3 billion, up 41.4 percent from a year earlier.

''The first quarter is as small as the trade surplus should get.

Inevitably it can only get bigger from here. It puts a lot of pressure on Beijing ahead of Hu's visit,'' said Ben Simpfendorfer, a strategist with Royal Bank of Scotland in Hong Kong.

Song Guoqing, chief economist at China Stock Exchange Executive Council, a Beijing think-tank, agreed that the figures would increase pressure on China ahead of Hu's talks with Bush on April 20.

''The full-year trade surplus is likely to reach 0 billion this year, which means that the pace of the yuan's appreciation should be faster,'' Song said.

The yuan has risen just 1.25 percent since it was revalued by 2.1 percent in July and cut free from a decade-old dollar peg to float within managed bands.

The surplus last year tripled to 2 billion and many economists had been expecting a modest fall in 2006.

But Gao Shanwen, chief analyst at Everbright Securities in Shanghai, said it was clear that the strong momentum from 2005 had carried over into the new year.

''I expect the trend of rapid growth in the surplus will continue, with the whole-year surplus between 0 billion and 0 billion,'' he said.

REUTERS CS GC1508