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POLITICAL ECONOMY
China trade volumes creep up in April: Customs
by Staff Writers
Beijing (AFP) May 08, 2014


US Treasury secretary to visit China
Washington (AFP) May 08, 2014 - US Treasury Secretary Jacob Lew will travel to China on May 11-13 for talks on the economic outlook for the world and the two superpowers, the Treasury announced Thursday.

Lew and Chinese counterparts will also discuss China's reform agenda, the coming annual US-China Strategic and Economic Dialogue, and "efforts to level the playing field for US workers and firms."

The Treasury said Lew's meetings with senior Chinese government officials will be on Tuesday.

Last month the Treasury warned Beijing over the recent fall in the yuan currency, which the United States has maintained is undervalued and contributes to China's huge trade surplus with the US.

"China has continued large-scale purchases of foreign exchange in the first quarter of this year, despite having accumulated $3.8 trillion in reserves, which are excessive by any measure. This suggests continued actions to impede market determination," the Treasury said in a semi-annual report on currency manipulation.

Asia currency weakness hits Standard Chartered Q1 income
Hong Kong (AFP) May 08, 2014 - Asia-focused banking giant Standard Chartered said Thursday first quarter profit was hit by weak Asian currencies and ongoing problems with its South Korean operations.

"The difficult market conditions that began last year have continued into the first quarter of 2014 and remain through April and into May," the London-based lender said in a statement to the Hong Kong Stock Exchange.

Group operating profit in the first quarter was down by a "high single digit percentage" compared with the same period last year, it said.

Group income was down by a "low single digit percentage" compared with the period a year earlier, hit mainly by weakness in the Indian rupee and Indonesian rupiah, the bank said.

Standard Chartered does not release actual quarterly figures.

"Despite a somewhat challenging external environment, we continue to support our clients' growth, whilst managing tightly our costs, risks and capital," group chief executive Peter Sands said in the statement.

"Our performance so far this year is in line with our expectations," Sands said, adding that the group's margins have stabilised.

Breaking down the group's business segments, Sands said income from consumer banking for the period was down by a single-digit figure year-on-year while its wholesale banking income was flat during the period.

Excluding South Korea, where income is down by some $110 million year-on-year, the group's income was flat on last year, Sands said.

The lender, which makes 90 percent of its profits in Asia, the Middle East and Africa, said in March net profit fell more than 16 percent last year to $3.99 billion and warned of a difficult first half of 2014.

The bank said then its South Korean retail bank had suffered a $1.0 billion write-down in its value, and produced lower revenue with higher bad loans during the year.

Standard Chartered shares closed at HK$170 in Hong Kong, up HK$1.30, or 0.77 percent.

China's exports and imports rose marginally in April, official data showed Thursday, rebounding from sharp declines in March, but analysts saw a mixed outlook with the world's second-largest economy in the grip of a growth slowdown.

Exports crept up 0.9 percent year-on-year to $188.54 billion, the General Administration of Customs announced, while imports increased 0.8 percent to $170.09 billion, resulting in a surplus of $18.45 billion.

The figures come a month after Customs reported that China's trade volumes fell dramatically in March, which analysts blamed on the continued impact of fake reporting of exports seen in early 2013.

Concerns over Chinese growth have increased this year after a series of weaker-than-expected statistics, though trade distortions have partially clouded the situation.

The country's gross domestic product (GDP) grew 7.4 percent in the first three months of 2014, weaker than the 7.7 percent in October-December last year and the worst since a similar 7.4 percent expansion in the third quarter of 2012.

In March imports slumped 11.3 percent year-on-year to $162.4 billion while exports fell 6.6 percent to $170.1 billion, for a trade surplus of $7.7 billion.

China had recorded an unexpected trade deficit of almost $23 billion in February, which authorities blamed on the Lunar New Year holiday season. That result was China's first monthly deficit in 11 months.

"China's trade data show signs of recovery but continue to understate the true health of the export sector," Julian Evans-Pritchard, China economist at Capital Economics in Singapore, wrote in a reaction to the April figures.

"April's low export growth was, as in previous months, largely caused by rampant over-invoicing of trade to avoid capital flows last year, which has created an artificially strong base for comparison," he added.

Slowing property activity suppressing commodity imports meant the outlook for import growth was "relatively weak", he said.

"China is likely to continue to post large trade surpluses this year."

Year-on-year price rises for new homes in China slowed in April for a fourth straight month, according to an independent survey released last week.

China's government has sought for more than three years to contain rising property values and increase the supply of affordable housing to stem discontent among ordinary citizens who cannot afford to buy.

- 'Mixed signals' -

Economist Zhang Zhiwei and colleagues at Nomura International maintained their view that growth is set to decrease further to 7.1 percent in the current quarter.

"The April trade data hold few surprises and we maintain our view of GDP growth slowing... as the property sector begins to correct," they wrote in a research note.

But Bank of America Merrill Lynch economist Lu Ting and colleagues called the year-on-year export growth "encouraging" and said it backed up their view that growth would accelerate slightly to 7.5 percent.

Growth in exports to the United States and the European Union in April far outpaced their performance in March, they added.

The trade figures come after diverse readings on Chinese manufacturing.

A private purchasing managers index (PMI) survey released Monday by British bank HSBC showed the sector contracted for a fourth consecutive month in April. In contrast, last week the government's official PMI remained in marginal expansion.

Liu Li-Gang and Zhou Hao, economists at ANZ Bank, cited "mixed signals" ahead for China's trade outlook, noting the up-tick in the official PMI reading but also a double-digit decline in contracts at a major Chinese trade fair.

The slowdown in Chinese growth comes as leaders say they want to make private demand the key driver for the economy, moving away from over-reliance on huge and often wasteful investment projects that have formed the basis for decades of expansion.

Such a transformation is expected to result in slower but more stable and sustainable growth in the long run. China in March set its annual growth target for this year at about 7.5 percent, the same as last year.

The median forecast in an AFP survey last month of 13 economists is for an expansion of 7.4 percent in 2014.

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