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To: Mohan Marette who wrote (124280)	5/13/1999 9:22:00 AM
From: D.J.Smyth	Respond to of 176387

07:47 DJS China's Trade Surplus Dwindled In April As Imports Leaped By 19% 07:47 DJS China's Trade Surplus Dwindled In April As Imports Leaped By 19% BEIJING -(Dow Jones)- The shrinkage in China's trade surplus continued in April, with the bulge narrowing to $960 million, as exports fell 7.3% and imports surged nearly 19% from year-earlier levels, the official Xinhua news agency reported, citing figures from the General Administration of Customs. The performance left the country with a trade surplus for the January-April period of $5.21 billion. The Xinhua report said the four-month surplus was down sharply from year-ago levels, but didn't provide any figures. For all of last year, China's trade surplus totaled $43.6 billion. The trade figures are closely watched because of the potential implications for China's currency, the yuan, which can be converted only for trade-related purposes. The government has promised repeatedly not to devalue the yuan this year, and backs up that vow with $146 billion in hard currency reserves, the world's second-largest behind Japan. It also strictly controls all trading on the Shanghai Foreign Exchange Center, the only place the yuan is traded officially. But in April, the outlook for China's trade surplus continued to worsen. Exports reached $14.8 billion while imports were valued at $13.84 billion. Total foreign trade in the month hit $28.64 billion, up a thin 3.7% from the year-earlier period, Xinhua said. For the first four months, China exported goods worth $52.03 billion, off 7.8% from the same period a year earlier, while imports rose almost 14% to $46.82 billion. Total trade during the four-month period was 1.2% higher than the year-earlier period at $98.85 billion, the report said. A sharp and sustained fall in the trade surplus could put pressure on the China's financial managers to adjust their no-devaluation pledge, some economists suggested. The government, for its part, maintains that its total balance-of-payments figures are more important than just the trade surplus. But government officials have also said that if the balance of payments, a broader measure of a country's trade performance that also factors in investment flows, turns sharply negative, it may have to reconsider its firm-currency policy. The balance of payments figure is still firmly in positive territory, however, because of heavy foreign direct investment inflows and minimal short-term foreign-debt obligations. After surging more than 20% in 1997 from 1996, China's overseas sales entered a slow decline early in 1998. The slide gathered momentum later in 1998, however, as the impact of the Asian financial crisis took hold. Currency devaluations around the region hit China in two ways: first, demand from Asia fell sharply, and second, many countries in the region became more competitive on the international markets. Some economists say the worst may be over for China's traders, and that export volumes should stabilize later in the year, particularly as the impact of new export-boosting policies take hold. The government recently lifted the export-tax rebate it offers exports by nearly three percentage points to an average of around 9%. The move amounts to an effective devaluation because it allows China's exporters to quote prices at a lower exchange rate. On Thursday, the yuan remained strong. The dollar closed at 8.2778 yuan compared with Wednesday's 8.2779 yuan, the Chinese currency's strongest point in nearly three months. About $100 million changed hands, traders said. -By Karby Leggett; kleggett@ap.org; and peter wonacott; pwonacott@ap.org Copyright (c) 1999 Dow Jones & Company, Inc. All Rights Reserved. 05/13 7:47a CDT