As we await the U.S. trade figures this morning, the Wall Street Journal brings us the news from the other side of the world. On Japan:
Japan's current-account surplus contracted slightly in February, the Ministry of Finance said, narrowing for the second-straight month as weak export growth was outpaced by a surge in imports...
The contraction in the surplus was less than what economists surveyed by Dow Jones and Nikkei News had expected. They estimated a contraction of 9.7% from a year earlier to 1.94 trillion yen. The February number followed a 28.2% contraction in January and a revised 34.6% expansion in December.
The current account measures trade in goods, services, tourism and investment. It is calculated by determining the difference between Japan's income from foreign sources against payments on foreign obligations, and it excludes net capital investment.
February's narrower current-account surplus was likely a result of a 20.3% contraction in the trade surplus for the month. While exports grew 1.4%, the gains were far outpaced by the 12.6% rise in imports.
But officials are warning, as officials do, about "special factors" that may make the February statistic unrepresentative of the the trend.
A ministry official added that some of the data also were distorted by special factors, including the Lunar New Year holidays, which took place in February this year but fell in January last year. Many analysts said Lunar New Year may have resulted in a surge of Asian imports into Japan ahead of the holidays.
"Given distortions...due to the Chinese New Year, we think the true picture of external demand won't emerge until we see the March results," Morgan Stanley economists said.
China's exports in March rose 32.8% from a year earlier to $60.87 billion, while imports grew 18.6% to $55.14 billion, the country's official Xinhua news agency reported. The gains put China's trade in a surplus of $16.58 billion for the first three months of the year, a turnaround from a deficit of $8.43 billion in the year-earlier period...
The turnaround in China's trade balance is partly a result of measures by Beijing to cool overheating in its economy. The upshot is that China is cutting back on imports of construction and investment-related products, and exporting surplus domestic production of chemicals and metals, according to UBS economist Jonathan Anderson."And this, in our view, is the real story to date," Mr. Anderson said in a recent research report.
No report on China is complete, of course, without speculation on when the yuan will float.
Pressures on Beijing to curb its textile exports and float its currency have mounted, with some members of the U.S. Senate voicing support for a tariff on all Chinese products entering the U.S. The U.S. and other Western nations say China's yuan is undervalued and gives Chinese exporters an unfair advantage over their competitors.
China says it aims to make its currency freely convertible, but hasn't given any timetable for the move. It says Washington should stop blaming Beijing for its ballooning current-account deficit and fix the problem itself by reducing its huge budget deficit and encouraging more private savings. The U.S. trade deficit with China rose to $162 billion last year.
Some economists expect Beijing will soon liberalize its currency regime, possibly by expanding the narrow bands within which the yuan is allowed to trade against the U.S. dollar, or by linking the yuan to a trade-weighted basket of currencies. However, few believe Beijing has any intention of allowing a sharp appreciation of the yuan, which could hurt exporters, imperil the country's fragile banking system and hurt farmers by making agricultural imports cheaper.