China's August trade surplus likely to relight currency feud

BEIJING — China's trade surplus hit its second-highest level this year in August, likely fueling U.S. demands for Beijing to ease currency controls.

Export growth weakened as global demand cooled while import growth rebounded in a new sign the slowdown in the world's second-biggest economy might be less severe than expected, government figures showed Friday.

The $20 billion trade surplus will fuel demands by Washington and others for Beijing to ease controls they say keep its yuan undervalued and give Chinese exporters an unfair price advantage. U.S. lawmakers hold hearings this month and some are pushing for sanctions as they face pressure to create jobs ahead of November elections.

"There certainly will be pressure from the United States," said economist Lu Zhengwei at Industrial Bank in Shanghai. "Their appetite is very big."

August export growth fell to 34.4 percent over a year earlier from July's 38.1 percent, the Chinese customs agency reported. But import growth rebounded to 35.2 percent from the previous month's 22.7 percent.

Strong imports are a rare bright spot for global exporters that are looking to China to help drive demand for factory machinery, iron ore and other goods. They suggest China's slowdown was moderating after growth fell from 11.9 percent in the first quarter of the year to 10.3 percent.

Export growth fell short of forecasts, and Lu said it reflected unexpectedly weak orders by foreign retailers for the peak Christmas selling season.

"That means the outlook is very grim," he said.

The trade surplus narrowed from July's 18-month high of $28.7 billion but was up 28 percent from a year earlier.

Through the first seven months of this year, the U.S. trade deficit with China is running 17.7 percent above last year's pace, spurring increased calls in Congress for punitive action.