China's Trade Surplus Keeps Growing and Growing

Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

Super-Size China Surplus To Heighten Trade Friction [Reuters]

Summary: China's October trade surplus grew 56% m-o-m, and 99% y-o-y to a new October record of $23.83 billion, smashing economists' forecast of $17.7b. Through October its surplus totals $133.7b, having already exceeded last year's full-year total of $102b in Sept. Meanwhile, the yuan reached its highest level against the dollar at 7.8661, but is only up 3.1% since it was revalued by 2.1% in July '05. Economists at least partially blame the yuan for the extraordinary trade surplus and China's $1 trillion-plus of foreign reserves. October exports grew 29.6% y-o-y to $88.3b, and imports +14.7% to $64.3b. The slower rate of imports is being blamed on Beijing's attempts to curb over-investment. China's central bank is seen having to raise rates for the 4th time this year. One analyst says instead of another rate hike, he expects another bank reserve requirement ratio increase.
Related links: Additional coverage: Bloomberg and L.A. Times/AP. Commentary: China's Fuel Imports Surge in September • China's Foreign Reserves Approaching $1 Trillion • China's Exports are Like the Energizer Bunny, Trade Surplus Keeps Growing • China: A Country of Diverse Consumers • China's Massive Infrastructure Spending for '08 Olympics and Beyond

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