And just as Citigroup predicted, US imports surge even as US exports jump to a record $172.7 billion. But the story is once again in the GDP reducing imports which jump by a whopping $220.8 billion, a $10.4 billion jump M/M. The total deficit of $48.2 billion is the highest since the June 2010 spike which hit $49.9 billion. From the release: "Exports increased to $172.7 billion in March from $165.0 billion in
February. Goods were $124.9 billion in March, up from $117.8 billion
in February, and services were $47.7 billion in March, up from $47.2
billion in February. Imports increased to $220.8 billion in March from $210.4 billion in
February. Goods were $187.0 billion in March, up from $176.9 billion
in February, and services were $33.8 billion in March, up from $33.5
billion in February. For goods, the deficit was $62.1 billion in March, up from $59.1 billion
in February. For services, the surplus was $13.9 billion, up from $13.7
billion in February." Ah, financial innovation being exported as per usual. Look for another round of Q1 GDP downgrades as this number takes out a few basis points in growth. As we know from China that April exports to the US jumped even more, this import surge will likely carry over into Q2 and result in more GDP cuts.
- The February to March increase in exports of goods
reflected increases in industrial supplies and materials ($2.5 billion);
automotive vehicles, parts and engines ($1.6 billion); capital goods
($1.0 billion); other goods ($0.8 billion); consumer goods ($0.7
billion); and foods, feeds, and beverages ($0.6 billion).
The February to March increase in imports of goods
reflected increases in industrial supplies and materials ($7.7 billion);
automotive vehicles, parts and engines ($2.1 billion); capital goods
($1.6 billion); and other goods ($0.6 billion). A decrease occurred
in consumer goods ($2.0 billion). Foods, feeds, and beverages were
- The February to March increase in exports of services was more than
accounted for by increases in other private services ($0.3 billion),
which includes items such as business, professional, and technical
services, insurance services, and financial services, other
transportation ($0.1 billion), which includes freight and port services,
passenger fares ($0.1 billion), and transfers under U.S. military
agency sales contracts ($0.1 billion). A decrease in royalties and
license fees ($0.1 billion) was partly offsetting. Changes in the other
categories of services exports were small.
The February to March increase in imports of services was
mostly accounted for by increases in other transportation ($0.2 billion)
and other private services ($0.1 billion). Changes in the other
categories of services imports were small.
And on the key relationship with China:
- The goods deficit with China decreased from $18.8 billion in February to
$18.1 billion in March. Exports increased $1.1 billion (primarily
industrial machines; civilian aircraft, engines, equipment, and parts;
and passenger cars) to $9.5 billion, while imports increased $0.3
billion (primarily computers and accessories and telecommunications
equipment) to $27.6 billion.
Which, as usual is quite funny, considering that from a Chinese perspective, exports to the US in March were $13 billion, and in April $15.1 billion. In other words, in March there was just a 30% discrepancy between the two most prevaricating economies.
More importantly, Tim Jeetner is on the job: the CNY parity was set at 6.4948 by the PBoC last night. A new record. And all is well, as now the US and China promise to play good in international trade. The following is the text of the framework for
promoting strong, sustainable, and balanced growth and economic
cooperation agreed to by U.S. Treasury Secretary Timothy Geithner and
Chinese Vice Premier Wang Qishan:
Following the consensus reached by President Hu Jintao and
President Obama in Washington D.C. on January 20, 2011, the special
representatives of President Barack H. Obama and President Hu Jintao,
U.S. Treasury Secretary Timothy Geithner and Chinese Vice Premier Wang
Qishan, have elaborated a framework of comprehensive economic
cooperation (the Framework) in the third round of S&ED in May 2011.
The United States and China affirm that both countries will, based
on common interest, promote more extensive economic cooperation, from a
strategic, long-term, and overarching perspective, to work together to
build a comprehensive and mutually beneficial economic partnership, add
to prosperity and welfare in the two countries, and achieve strong,
sustainable, and balanced growth of the world economy.
1. The framework for comprehensive economic cooperation is based
on the national interest of each country in strong, sustainable, and
balanced economic growth and continued growth in employment. At the
same time, the U.S.-China economic relationship is based on a wide range
of common and overlapping interests. Each country recognizes that the
health and continued growth of the other's economy is indispensible to
its own prosperity.
2. As the two largest economies in the world, economic outcomes and
policy actions in the United States and China have a significant impact
on the health of the global economy. The United States and China
recognize and take into account the impact their policies have on the
global economy, and cooperate to strengthen the international trade and
financial institutions that support global growth and stability.
3. As a part of expanded, closer, and more extensive economic
cooperation, China and the United States are increasing the extent of
their consultation on policy actions that affect the interests of the
4. The implementation of the U.S.-China Framework relies on
existing mechanisms of dialogue and cooperation. The two countries
reaffirm their pledge to implement commitments as set forth in the S&ED
Economic Track Joint Fact Sheets.
II. Deepen Macroeconomic Cooperation
Both countries recognize the fundamental consistency between their
goals to promote strong, sustainable, and balanced growth, and commit to
further strengthen macroeconomic-policy communication and coordination.
5. The two countries are strengthening use of existing channels to
deepen cooperation on macroeconomic, fiscal, financial, and structural
issues relevant to our two economies and to the health of the global
6. The two countries reiterate their support for the G-20 Framework
for Strong, Sustainable, and Balanced Growth and reaffirm their
commitments to improve the living standards of our citizens through
strong economic and jobs growth, and to use the full range of policies
to strengthen the global recovery and to reduce excessive external
imbalances and maintain current account imbalances at sustainable
levels. The United States and China affirm active support for the
mutual assessment process of the G-20.
7. Both countries pledge to work together with other countries to
maintain the stability of international monetary environment. The United
States pledges to maintain vigilance against excess volatility in
exchange rates, and China pledges to continue to enhance RMB exchange
III. Develop a More Balanced Trade and Investment Relationship
The two countries recognize the importance of open trade and
investment for promoting innovation, creating jobs, and boosting incomes
and economic growth. The United States and China are committed to
further expanding bilateral trade and investment, fostering more open
trade and investment globally, and fighting against trade and investment
8. Both countries commit to take comprehensive measures to promote
more balanced trade between the United States and China.
9. The two countries are committed to working proactively to
resolve bilateral trade and investment disputes in a constructive,
cooperative, and mutually beneficial manner.
10. The two countries recognize the importance of the principle of
nondiscrimination in government procurement and innovation policies, as
jointly acknowledged in S&EDs I and II, and reaffirm their continued
support for the strong protection of intellectual property rights.
11. The two countries are committed to fostering open and fair
investment environments, and continuing to promote transparency and
predictability for investors of both countries.
12. The two countries undertake to explore new cooperation
opportunities in the process of transforming and restructuring their
economies, including in infrastructure development.
13. Both countries commit to actively develop sub-national economic
cooperation, and promote communication and exchange between enterprises,
think tanks, and universities. The two countries undertake to improve on
mechanisms including the U.S.-China Investment Forum, the U.S.-China
Governors Forum, and the U.S.-China Initiative on City-level Economic
Cooperation, and further promote the "second-track" dialogue between
business leaders and academics in both countries.
IV. Deepen Cooperation in the Financial Sector
The two countries pledge to further deepen bilateral and
multilateral cooperation on financial sector development, investment,
regulation, and supervision, and cooperate to support flows of
productive capital into, and the efficiency and stability of, financial
markets of both countries.
14. The United States and China recognize the importance of fair
and open investment environments and support an open environment for
investment in financial services and cross-border portfolio investment,
consistent with prudential and national security requirements.
15. China and the United States commit to deepen their cooperation
to ensure financial sector stability and strengthened financial sector
regulation and supervision, both bilaterally and in the G-20, the
Financial Stability Board, and international standard-setting bodies.
V. Strengthen Regional and International Economic Cooperation
16. The United States welcomes China playing a bigger role in
international economic affairs. China recognizes the important role the
United States plays in the international economic system and in the
Asia-Pacific region, and welcomes U.S. participation in and contribution
to economic stability and prosperity in the region.
17. The two countries pledge to strengthen communication and
coordination and to support a bigger role for the G-20 in international
economic and financial affairs.
18. Both countries recognize the important role of APEC as a
platform for economic cooperation in Asia and the Pacific, and pledge to
enhance coordination and cooperation under the APEC framework.
19. The two countries pledge to work together to strengthen the
global financial system and reform the international financial
architecture. The two countries are continuing their strong cooperation
to strengthen the legitimacy and improve the effectiveness of the
International Monetary Fund, Multilateral Development Banks (MDBs), and
other institutions involved in global economic governance.
20. The two countries intend to jointly promote efforts of the
international community to assist developing countries, in particular
the Least Developed Countries, to achieve the Millennium Development
Goals (MDGs). Both sides, in partnership with the Multilateral
Development Banks, undertake to explore cooperation that supports global
poverty reduction and development, and regional integration to
contribute to inclusive and sustainable economic growth.
Timothy F. Geithner Wang Qishan
Secretary of the Treasury Vice Premier
For the United States of America For the People's Republic of China