China trade surplus doubles, irking U.S.

China's trade surplus almost doubled in the first quarter, adding to friction as the U.S. took complaints against its second-largest trading partner to the World Trade Organization.

The surplus widened to $46.4 billion from $23.3 billion a year earlier, the customs bureau said on its Web site Tuesday. The March gap was $6.87 billion, smaller than economists expected.

The U.S. on Tuesday filed two cases at the WTO alleging failure to curb copyright violations, less than two weeks after deciding to impose duties on imports of Chinese coated paper. U.S. lawmakers say China uses an undervalued currency and subsidies to help spur the nation's booming exports of textiles, electronics and toys.

"The bulging surplus will intensify trade friction and protectionist initiatives against Chinese exports, especially in the U.S. and Europe," said Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong. "It will also strengthen the pressure for further appreciation of the yuan."

China's trade surplus swelled to a record $177.5 billion last year, helping to fuel a 10.7 percent economic expansion, the fastest growth since 1995. The yuan has gained 7.1 percent against the dollar since a decadelong fixed rate was scrapped in July 2005.

Chinese businesses rushed to sell products overseas in January and February in anticipation of government measures to slow exports and because of protectionist sentiment abroad, said Wang Qing, an economist at Bank of America Corp. in Hong Kong.

That led to a March trade gap that was 38 percent smaller than a year earlier, the least in 13 months, and below the $20 billion median estimate of a Bloomberg survey of economists.

"It's more important to look at the first quarter as a whole, which is a really large trade surplus," said Wang.

Exports gained 6.9 percent to $83.4 billion in March, the slowest pace in five years, and imports climbed 14.5 percent to $76.6 billion.

The March figures will do "nothing, zilch, nada to address political concerns in the U.S. about China's overall trade surplus," said Stephen Green, senior economist at Standard Chartered Bank Plc in Shanghai. "The numbers have now settled down, but still to a very high level."