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TRADE WARS
China trade surplus widens in April
by Staff Writers
Beijing (AFP) May 10, 2012

Hong Kong firm buys Aquascutum in $24 mn deal
Hong Kong (AFP) May 11, 2012 - A Hong Kong company said it has agreed to buy the business and assets of troubled British luxury clothing maker Aquascutum for �15 million ($24.2 million).

YGM Trading told the Hong Kong stock exchange late Thursday that the acquisition was based on the "substantial value" of the more than 160-year-old icon of British high-end fashion, which entered administration last month.

YGM has owned Aquascutum's brand licence for Asian markets since 2009.

Aquascutum, which is known for trench coats worn by Winston Churchill and Greta Garbo, said in April that it had entered administration due to "challenging conditions" in Britain.

YGM shares were 1.13 percent higher at HK$19.7 on Friday morning.


China said Thursday its trade surplus widened in April as import growth slowed, casting doubts over the capacity of the world's second biggest economy to rebound quickly.

The country recorded a better-than-expected surplus of $18.42 billion in April, the customs agency said. Anaemic growth in imports covered weak exports, which continue to be hit by difficulties in Europe, China's biggest market.

Imports edged up just 0.3 percent year on year to $144.83 billion in April, raising questions about the government's ability to boost domestic demand as it tries to rebalance the economy away from export dependence.

Growth in shipments abroad rose just 4.9 percent to $163.25 billion.

"The export story is clear. We know the eurozone crisis is dragging down exports. We had just not anticipated by how much," said Alistair Thornton, economist for IHS Global Insight.

"Imports are much more worrying. They point to a real weakness in the domestic economy."

A survey of economists by Dow Jones Newswires had forecast imports to rise 10 percent and exports to increase 8.5 percent.

Exports to the European Union grew a mere 0.3 percent from January to April, customs data showed, reflecting the recent string of poor data indicating a contraction in manufacturing activity in China's workshops and factories.

Thursday's figures add to concern about the state of the Asian giant, which plays a huge role in the growth of the world economy.

While April's trade surplus is the second in a row, the country in February posted a huge deficit of $31.48 billion -- the largest in more than a decade -- owing to falling overseas demand.

"Today's trade data lent further to support our view that China's economic growth has not bottomed out yet and that the authorities should provide more easing to stabilise momentum," Wei Yao, economist with Societe Generale said.

China's economy grew just 8.1 percent in the first quarter, hit by weak demand at home and abroad, despite a string of government measures to help struggling small businesses and support the export sector.

The central bank in February cut the amount of cash banks must hold in reserve for the second time in three months as policymakers moved to increase lending and boost domestic consumption. Analysts expect more measures following the release of Thursday's data.

The economy grew 9.2 percent last year and 10.4 percent in 2010, but the government in March set a growth target of 7.5 percent for this year, signalling markedly lower expectation.

Economists do not expect growth to strengthen until the second half of the year, when easing measures are expected kick in and growth to pick up in Europe and the United States.

"Looking forward, there will be easing on lending as well as more structural measures, such tax cuts and more investment in social housing," said HSBC economist Qu Hongbin.

The trade data should further ease tensions with the United States, which persistently argues that Beijing keeps its currency artificially low to subsidise its exports.

Last week, US Treasury Secretary Timothy Geithner, in Beijing for annual economic talks between the two countries, called for China to continue to let its currency appreciate further.

China's trade surplus narrowed in 2011 to $155.14 billion and analysts expect it to continue to shrink this year as both exports and imports remain weak.

Markets closed flat on Thursday as investors remained cautious ahead of more economic data to be released Friday.

The benchmark Shanghai Composite Index, which covers both A and B shares, edged up 1.64 points to 2,410.23.

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Japan sees record drop in current account surplus
Tokyo (AFP) May 10, 2012 - Japan's current account surplus halved in the year to March, a record year-on-year fall on higher fuel costs and weak exports, and the nation's smallest surplus since the mid-1990s.

Japan logged a surplus of 7.893 trillion yen ($99.0 billion) in the 2011-12 fiscal year, down 52.6 percent from a year earlier and the smallest yearly surplus since fiscal 1996, data from the finance ministry showed.

The year-on-year percentage drop was the sharpest since comparable data began in fiscal 1985, according to the ministry.

The latest reading, the broadest measure of Japan's trade with the rest of the world, came as the debt crisis in Europe -- a key market for Japanese exports -- and the soaring yen weighed.

But the nation's surplus in the month of March alone fell by a smaller-than-expected 8.6 percent from a year earlier, offering a glimmer of positive news.

Japan's March surplus stood at 1.589 trillion yen, bigger than the 1.4 trillion yen surplus that economists had expected.

March exports rose 7.3 percent from a year earlier while imports soared by 11.9 percent.

The country's current account balance has taken a hit since the March 2011 quake-tsunami disaster, which pounded the world's third-largest economy.

Nuclear reactor shutdowns following the crisis have left Japan without atomic power for the first time since the 1970s, stoking fears about energy shortages.

Nuclear power had previously supplied about one-third of the resource-poor nation's energy needs.

Imports in the year to March soared 14.0 percent because of higher oil prices as well as increased demand for fossil fuel to ramp up thermal power generation as last year's tsunami-sparked nuclear disaster spawned anti-atomic sentiment.

Exports over the same period fell 2.8 percent.

Japanese exports have been inching higher on the back of a recovery in the US economy and a slightly weaker yen from the record highs seen late last year, a positive sign for an economy heavily dependent on overseas demand for growth.

Income from overseas investments also continued rising in March, posting a 10.1 percent on-year rise.

As Japanese companies shift production overseas due to the relatively strong yen, income has become a key factor in Japan's current account surplus.

"The current account surplus shrank as the balance in goods and services trade turned red despite an expansion in the balance of income," which includes returns on overseas investments, the ministry said Thursday.

Japan posted a current account surplus in February thanks to a stronger US economy, reversing a record deficit in January although the figure was still down 30.7 percent on-year.

In January, the country logged a record 437.3 billion yen current account deficit, its first monthly dip into the red since January 2009, when it posted a then-record shortfall of 132.7 billion yen at the height of the global financial crisis.

The current account measures the value of a country's imports and foreign investments against the value of its overseas income such as exports of goods and services and returns on overseas investments.

-- Dow Jones newswires contributed to this article --



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TRADE WARS
Outside View: Fix the trade deficit
College Park, Md. (UPI) May 9, 2012
The U.S. Commerce Department is expected Thursday to report the deficit on international trade in goods and services was $49.5 billion in March, up from $46.0 billion a month earlier. The $600 billion annual deficit is the most significant barrier to achieving a robust economic recovery and creating jobs, and oil and consumer goods from China account for virtually the entire problem. ... read more


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