China posted a larger-than-forecast $27.1 billion October trade surplus, a day before Group of 20 leaders including Presidents Barack Obama and Hu Jintao meet in Seoul to tackle global imbalances in spending and capital flows.
Exports gained 22.9 per cent from a year earlier and imports rose 25.3 per cent, the customs bureau said. With the surplus pumping cash into the fastest-growing major economy, the central bank announced a 0.5 percentage point increase in lenders’ reserve requirements.
China’s surplus and curbs on the yuan fuel tension with trading partners and complicate the nation’s monetary policy as inflation accelerates and officials seek to limit the risk of asset bubbles. Obama said yesterday in Jakarta that G-20 leaders will “extensively” discuss trade gaps and currency restrictions hindering global growth.
“The rebalancing of China’s economy has an awfully long way to go — in fact it’s hardly even got started,” said Mark Williams, an economist at Capital Economics Ltd in London, who worked at the UK Treasury as an adviser on China from 2005 to 2007. “In normal circumstances, the world might be willing to wait, but not when the likes of the US are struggling with very high unemployment,” he said.
A one-sentence statement from the People’s Bank of China this evening announced the increase in the amount of money that lenders must set aside as reserves, effective November 16.
Bank of China
Earlier, business magazine Caixin reported that an increase applied to Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China, Bank of Communications, China Construction Bank and Shanghai Pudong Development Bank.
A person with direct knowledge of the situation had confirmed to Bloomberg News that Bank of Communications was affected. Caixin said the increases would apply for three months. The central bank statement didn’t mention such a time limit.
