Trade surplus shrinks on faster import growth

China’s trade surplus shrank to US$17.8 billion in August from US$31.5 billion in July as a sharp increase in imports outpaced continued growth in exports, the Financial Times reported. Exports increased 24.5% year-on-year, up from the 20.4% increase posted in July, while imports jumped 30.2% y-o-y in August, far above the expected 21% rise. Despite the decrease in the trade surplus, its still-high level and strong growth in exports led analysts to expect that China will continue to face pressure to appreciate its currency. “The level of the trade surplus is still at a very high level and the stronger-than-expected reading of exports growth [in August] is making it more difficult for the people arguing against appreciation,” said Yu Song, an economist at Goldman Sachs (GS.NYSE).