Michael Babad These are stories Report on Business is following today. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage. China trade data to heighten tension China’s blowout trade numbers are certain to raise the temperature as leaders of the G20 begin meeting in Seoul tomorrow. It’s this very issue - global imbalances and currency reform - that has raised tensions in the run-up to the discussions. Official data released today showed that growth in exports slowed slightly in October - but slow for China still meant a 22.9-per-cent surge - while imports rose 25.3 per cent. That left China with a surplus of $27.15-billion (U.S.), a marked increase from the $16.88-billion registered in September. The numbers come amid heightened tensions over imbalances in trade and currencies. China, in particular, has been under constant pressure from the United States and other countries to allow its yuan, also known as the renminbi, to appreciate. Adding fuel to that fire are today’s numbers from China showing it exported $25-billion in goods to the United States last while, in return for U.S. imports valued at just $5-billion. This will set the stage for a “tense” G20 summit, noted Mark Williams, senior China economist at Capital Economics in London. “China’s delegation to this week’s G20 summit will have a hard job convincing others that China’s government is doing all it can to stimulate domestic spending,” Mr. Williams said. “Concern about the export outlook will not be accepted as a reason to move slowly on the renminbi. In dollar terms, China’s exports are now 8 per cent higher than they were two years ago, when the financial crisis hit. Global exports overall are still some way below that level. “... The last five months’ surpluses with the U.S. were the five largest on record. All in all, these data will bolster the case of those at the G20 and elsewhere arguing that China should be doing more to stimulate domestic demand.” China's October trade surplus soars China leads charge against U.S. injection of hot money Carney backs Fed on massive bond buying Behind the trade numbers The United States and trade irritants aside, there was some good news in the Beijing data for resource-based economies such as Canada, and the world economy in general as China remains a global engine of the recovery. “The strong import data are consistent with other activity indicators showing that China has had only a moderate slowdown in recent months, with domestic demand still solid,” said Brian Jackson of RBC Dominion Securities. “High commodity prices are also clearly playing a major role,” Mr. Jackson added, citing the fact that imports of key resources, including oil, copper and iron ore, have seen “mixed growth” in terms of volume, but are up sharply in terms of value. “Imports from major commodity suppliers - including Australia, Canada and Russia - also showed stronger year-over-year growth in October,” he said. Is the commodities surge sustainable? China hikes bank reserves At the same time, according to reports from Beijing, China boosted its reserve requirements for the country’s major banks by half a percentage point. This comes amid mounting concerns over so-called hot money flooding into China and other emerging markets, particularly in the aftermath of the Federal Reserve’s new $600-billion (U.S.) quantitative easing program. “This move further highlights that Beijing’s policy focus has shifted decisvely from concerns about domestic growth and external demand to concerns about inflation pressures and liquidity management,” RBC Dominion Securities economists said in a research note. “Further monetary tightening will be needed over the coming months and we look for at least [half a percentage point] of interest rate hikes during the coming year.” China orders banks to boost reserves China, Europe weigh on markets China’s moves and continuing concerns over Ireland’s debt troubles are weighing on markets this morning. While Japan’s Nikkei 225 climbed 1.4 per cent, Shanghai’s composite slipped 0.6 per cent and European stocks were lower. London’s FTSE 100, German’s DAX and the Paris CAC 40 were down by between 0.5 per cent and 0.7 per cent at about 6:30 a.m. ET. Dow Jones industrial average and S&P 500 futures were just about flat. “U.S. stock index futures are little changed but European shares are broadly lower on concern that Ireland is careening towards a Greek-style bailout and that tighter monetary policy in China will slow its economy,” said Sal Guatieri of BMO Nesbitt Burns. “Ireland's 10-year bond rates pushed further above 8 per cent as its political parties bickered over how to restrain its massive budget deficit. China’s larger-than-expected trade surplus in October and the government’s decision to increase reserve ratios for some banks signal tighter monetary policy, which is lifting the yuan to 17-year highs against the greenback.”

Source