International Headlines
• China’s trade deficit comes in larger than forecast - Trade balance turned red in March, posting the first deficit since May 2004 at US$ 7.24bn (JPMorgan: -$2.3 bn; consensus: -$0.39 bn). We think the deficit will only be temporary. Seasonally adjusted, trade deficit came in more modest at $0.6bn. March exports rose 24.3% over-year-ago (JPMorgan: 28.2%; consensus: 26.9%), translating into a significant fall of 7.2%m/m, sa. This comes on the back of the strong 5.9%m/m, sa monthly average pace of expansion since December09, with the sequential trend growth moderating to a still decent level of 39.2%3m/3m, saar by March. We believe the decline last month represents some payback to earlier gains, rather than reverses the solid recovery trend in overall exports. Meanwhile, imports also rose notably at 64.7%oya in March (JPMorgan: 64.1%; consensus: 55.7%), translating into a 6.0%m/m, sa gain, though the sequential trend similarly moderated to 66.5%3m/3m, saar through March.
· China and the yuan – China reported a trade deficit over the weekend (as was expected), which officials from the country pointed to as evidence to refute claims that the yuan level was distorting economic relationships. The official Xinhua News Agency cited Yao Jian, a commerce ministry spokesman, as saying the March trade deficit “proves” that the level of the renminbi was not the “decisive” factor that caused trade imbalances. FT