The Wall Street Journal-20080216-Politics - Economics- Export Growth Supports China-s Monetary Policy
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Politics & Economics: Export Growth Supports China's Monetary Policy
Full Text (439 words)BEIJING -- An acceleration of China's export growth in January will likely bolster the case for Beijing to continue its tight monetary policy.
Economists said the trade data and rebounding money-supply growth in January will encourage China's government to continue trying to curb inflation and economic overheating, instead of easing policy to cushion the nation from the impact of a slowing U.S. economy.
China's exports in January grew 26.7% from a year earlier, higher than December's 21.7% rise and the average forecast for an 18.5% gain in a poll of economists, data issued Friday by the General Administration of Customs showed.
The pickup confounds expectations that export growth would slow because global demand for China-made goods weakened and because snow storms that battered many parts of China last month shut down factories and roads. Still, the January numbers typically are an imperfect barometer because of seasonal distortions caused by the Lunar New Year holiday.
The U.S. slowdown is likely to hurt Asian countries that rely on exports to the U.S. Thursday, for instance, Singapore cut its economic-growth forecast for this year.
Warning against reading too much into a single month's data, economists said they expect China's export growth will also slow this year. The customs bureau didn't say how quickly Chinese exports to the U.S. or the European Union -- the country's two key export markets -- grew in January, making it hard to assess the impact of the U.S. slowdown.
Still, China's strong trade performance now "doesn't lend support to the argument that policy tightening needs to be loosened because of sluggish exports," Goldman Sachs said in a research note. The strong export growth, it said, continues to "put pressure on the authorities to slow down aggregate demand to ease inflation pressures."
The International Monetary Fund's chief, Dominique Strauss-Kahn, after meeting Premier Wen Jiabao and central bank Gov. Zhou Xiaochuan, told reporters in Beijing on Friday: "We agreed that continued tight monetary policy will be important in containing investment growth and inflationary pressures."
Mr. Strauss-Kahn also urged China to accelerate the pace of appreciation of the yuan, saying the move would help China and the global economy.
China' imports in January grew 27.6% from a year earlier to $90.17 billion, above the average economist forecast of 20.9% and faster than December's 25.7% rise.
China's trade surplus, a key contributor to liquidity in the country, narrowed to $19.49 billion in January from $22.69 billion in December, but exceeded the average forecast from economists of $17.2 billion. Exports totaled $109.66 billion in January, up from $86.62 billion in the same month last year.
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Liu Li contributed to this article.
