Back to surplus

Somewhat surprisingly, China's trade surplus widened to $13 billion in May. Earlier in the year the Econometer reported on China's $1 billion trade deficit in the first quarter of the year. The report said that the deficit was probably largely due to seasonal factors, and this seems to have been borne out by subsequent events. The trade surplus was around $11 billion in April, yet the $13 billion surplus in May is the highest monthly surplus so far in 2011. China's imports increased by 28.4 percent year-on-year in May, up from 21.8 percent in April (see Chart 2). The growth in exports was only 19.4 percent year-on-year in May, down from 29.9 percent in April (see Chart 3). On a month-on-month basis, however, China's imports decreased from $144.26 billion in April to $141.1 billion in May, while exports increased from $155.69 billion in April to a record $157.2 billion in May.

A large trade surplus, however, will be little comfort to China's economic planners in the midst of rampant inflation. Hence tightening measures will remain at the order of the day in China, for as long as it tak