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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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