The trade surplus narrowed 10.2 percent to about $41.6 billion in the three months to March 31 from a year earlier, according to calculations by Bloomberg News based on trade data released by the Ministry of Commerce. The official statistics are due to be released by the customs bureau tomorrow.
Premier Wen Jiabao said last week that China needs to rein in the fastest inflation in 11 years, while trying to sustain growth as a global slowdown cools overseas sales. Foreign direct investment almost doubled to $27.4 billion from a year earlier, the Ministry of Commerce said today, adding to the cash flooding the economy from exports and fanning price increases.
The International Monetary Fund yesterday cut its 2008 economic growth forecast for China to 9.3 percent from 10 percent. China was the biggest driver of world growth last year, contributing 19 percent, according to an IMF estimate.
China's statistics bureau today raised its estimate for economic growth in 2007 to 11.9 percent from 11.4 percent because of higher growth in service industries including telecommunications and retailing.
The yuan rose past 7 to the dollar for the first time since the fixed exchange rate ended in 2005. The currency traded at 6.9912 at 2:38 p.m. in Shanghai.
China has allowed a 4.5 percent gain in the currency this year, more than half the increase for all of 2007. A stronger yuan may also help Premier Wen control inflation by lowering import costs and raising export prices.
The nation's policy makers ``are accelerating the pace of renminbi appreciation, as they should,'' Jim O'Neill, London- based head of global economic research at Goldman Sachs Group Inc., said in a television interview. ``It's pretty clear China is going to keep a tightening policy.''
This year China has twice raised the amount of money it asks banks to set aside as reserves. The central bank has kept interest rates unchanged at a nine-year high after six increases in 2007.
China's exports expanded 21.4 percent to $306 billion in the first quarter, slowing from an increase of 27.8 percent a year earlier, according to calculations by Bloomberg based on the trade ministry's data.
Imports climbed 28.6 percent to about $264 billion, the calculation showed.
China's exports of machinery and electronics products rose 23.1 percent to $181.4 billion in the first quarter from a year earlier, accounting for 59.3 percent of the nation's shipments, the ministry said in a statement on its Web site yesterday.
Machinery and electronics imports rose 16.4 percent to $125.3 billion, making up 47.4 percent of imports, the ministry said. The figures were used to calculate the total trade surplus.
The March trade surplus doubled to about $13.6 billion from a year earlier, according to the calculations. Last year's surplus of $6.8 billion was depressed by changes to export taxes and China's Lunar New Year.
Slowing demand from Europe and the U.S., China's largest export markets, faster yuan appreciation against the dollar and rising costs from labor and imported raw materials are squeezing exporters' margins and discouraging outbound shipments, said Shen Minggao, an economist at Citigroup Inc. in Beijing.
Investment by foreign companies climbed 39.6 percent to $9.3 billion in March from a year earlier. In the first quarter of last year companies invested $15.9 billion in China.
Cash from investment may fan money-supply growth and add pressure on prices just as imported commodity costs are climbing.
Rising imports, costs and expectations for prices to gain are adding to inflationary pressure, the People's Bank of China said in a report on financial markets today.
China's wholesale prices jumped 10.2 percent in March from a year earlier, the central bank said today. That was the fastest pace since at least November 2000.