The Chinese economy started 2005 with a better-than-expected report card, propelled by strong headline growth and mild inflation in goods and services. The only surprises were a much stronger-than-expected export performance and much weaker-than-expected import growth. But the latest trade data have again put the RMB peg under the global spotlight and underscored the awkwardness of government policies that merely try to address the symptoms of a misaligned currency.
The combined first quarter trade surplus totaled $16.6 billion, in contrast to a trade deficit of $8.4 billion in the same period last year. In real terms, the swing in net exports is likely to be even sharper as import prices have...
