China's New Global Trade Role of Importer

After China posted a trade deficit in March, which helped it to make the case that it should not revalue the yuan, the world's largest nation by population posted a surplus in April. But it was a tiny one and could signal a change in China's role in world trade. This April's surplus was only $1.68 billion -- a drop of 87% from April last year.

Imports rose almost 50% for the month and exports were up 30.5%. Bloomberg had a consensus estimate of 28.9% for exports. Both numbers should grow, but for very different reasons. China's stimulus package has obviously helped put liquidity into consumer markets. China's middle class is almost certainly rising again. Factory orders and exports of goods have risen rapidly since the beginning of the year -- driven in part by modest recoveries in Western nations, including the U.S. That manufacturing activity means that the sector needs more workers, many of whom have moved from agricultural regions into the large cities. These workers essentially add to China's middle classes, strengthening the consumer base within the nation. They buy goods made in China, but also finished goods from the U.S., E.U. and Japan.

China has also become a huge net importer of oil. In 2009 crude imports rose to 4.1 million barrels a day. The nation remains a major oil producer, but not enough to supply its own needs. The country's largest oil companies, led by PetroChina (PTR), have been particularly aggressive in lining up new production via partnerships with nations in South America and Africa, but they're unlikely to create fields that will come online in the next two or three years. China's coal imports tripled in 2009 -- another sign that its manufacturing engine needs much more fuel than the nation can produce.

Exports from the People's Republic will remain robust, but their growth may slump modestly. Chinese exports to E.U. nations are bound to be compromised by austerity measures in Greece, and those measures are likely to spread to deficit-ridden nations, including Spain and Portugal, as they implement austerity programs of their own to bring down deficits.

But ultimately, the major shift in the character of China's trade may be permanent; A combination of an ongoing need for commodities it cannot produce and an expanding middle class hungry for Western products.