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China posts March trade surplus
Howard Richman, 4/10/2012

The Wall Street Journal headlines the article (China Posts Surprise March Trade Surplus). But it was no surprise to us. In the March 24 American Thinker (Falling Yuan Latest Failure of Obama's Trade Policy), we pointed to scattered news reports that China was stocking up on soybeans, copper and oil in February and argued that China's trade surplus was just due to China building up foreign raw materials inventory a little earlier than usual. We wrote:

The media justifies the Chinese government's decision to bring down the yuan-dollar exchange rate by citing reports that China ran overall trade deficits in January and February. During the first quarter of each recent year, usually in March, the Chinese government encourages its many enterprises to build up their inventories of foreign raw materials. As a result, China occasionally runs monthly trade deficits. The only thing new this year is that the inventory build-up came a bit earlier than usual.

 Here is the Wall Street Journal's take on why China ran a "surprise" surplus in March:

Economists had expected a deficit for March. The median forecast in a Dow Jones Newswires survey of 15 economists was a $3.2 billion deficit for the month....

Imports rose only 5.3%, compared with expectations for a 9.3% rise and February's 39.6% increase....

The dismal performance of imports in March suggests that "domestic demand is weakening and may revive hard landing concerns," Dariusz Kowalczyk, an economist from Credit Agricole CIB wrote in a research note. "It is also likely to convince policy makers to ease monetary policy to stimulate the domestic segment of the economy."

What nonsense! This isn't complicated. China's trade deficit in China was due to foreign raw materials inventory buildup. China's surplus in March was due to an end to foreign raw-materials inventory buildup.

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