China’s trade surplus declined by 8%, from $62.9 billion to $58 billion, from January-April 2008 compared year-over-year with 2007, the result of higher oil prices and other crude materials imports, yet the surplus for manufactures surged by 34%, according to a Manufacturers Alliance/MAPI analysis of Chinese trade data for the first four months of the year. China’s worldwide trade surplus in manufactured goods is on track to rise from $444 billion in 2007 to $586 billion in 2008.
 
Ernest H. Preeg, MAPI Senior Fellow in Trade and Productivity and author of India and China:  An Advanced Technology Race and How the U.S. Should Respond, also notes that the Chinese surplus was down by 2% with the U.S. but rose by 26% with the European Union (EU), marking the first time China’s surplus is larger with the EU than the U.S.
 
“The modest overall decline in the Chinese trade surplus masks the continued rapid rise in the Chinese surplus in manufactures, now larger with the EU than the U.S.,” Preeg said.  “This is principally the result of the grossly undervalued Chinese currency, even more undervalued with the euro than with the dollar.”
 
Preeg’s analysis highlights a number of key issues regarding China’s trade statistics:
The trade deficit for petroleum was up by 80%, to $43.8 billion in 2008 and for other crude materials by 35%, to $41.9 billion;
 
The trade surplus in manufactures was up by 34%, to $151.5 billion in 2008. By export market, the Chinese surplus was down 2% for the U.S., from $47.2 billion in 2007 to $46.3 billion for 2008, while up 26% for the EU, from $36.6 billion to $46.1 billion.
 
Thus, through April 2008, China recorded surpluses at nearly the same level for the U.S. and the EU, in contrast with the much higher surplus with the U.S. in 2007. These figures, however, do not include large Chinese exports through Hong Kong to these destinations. A Hong Kong adjustment would raise China’s surplus with the EU above that with the U.S. because Chinese exports to the EU were 18% higher than to the U.S..
 
Preeg further notes that Chinese trade with India grew faster than with any other major trading partner, with exports up by 49%, to $9.7 billion, and imports up by 87%, to $9.7 billion.
 
“These figures dispel the notion that India is a laggard exporter of merchandise trade,” he added.