China Current-Account Surplus More Than Halves in 1Q - Wall Street Journal

--China 1Q current-account surplus at $24.7 billion from $60.5 billion surplus in 4Q-SAFE

--China's capital, financial account shows 1Q $49.9 billion versus $29.0 billion 4Q deficit

--Analysts say points to modest yuan appreciation

(Recasts, adds comments from analysts, foreign exchange regulator)

By William Kazer

Of Dow Jones Newswires

BEIJING (Dow Jones)--China's current account surplus, the broadest measure of its trade balance with the rest of the world, more than halved in the first quarter on weaker export growth in a worsening global economy.

The surplus was $24.7 billion from January through March compared with $60.5 billion in the fourth quarter of last year, data issued by the foreign exchange regulator, the State Administration of Foreign Exchange, said Thursday. Chinese export growth, racing at 20.3% in 2011, slowed to an annual 7.6% in the first quarter.

"The smaller current account [surplus] is mainly due to sluggish exports, dragged down by European economic troubles," said Ma Xiaoping, economist at HSBC. "We expect that the current account surplus will narrow further, though it will still top $100 billion for the entire year."

The European Union economy will stagnate this year, the bloc's executive forecast in February. A sovereign debt crisis has forced governments across the region to cut spending and raise taxes. By comparison, the U.S. economy, the world's largest, will expand 2.1%, the International Monetary Fund forecast this month.

China's capital and financial account - a measure of net capital inflows - swung to a $49.9 billion surplus in the first three months of the year from a $29.0 billion in the fourth quarter, SAFE said. That shows fears of a "hard landing" for the Chinese economy eased and foreign direct investment inflows continued, albeit at a slower pace than a year ago.

Analysts said that neither figure was a surprise but Beijing will point to the falling current-account surplus as progress in rebalancing the economy away from export-driven growth.

Analysts said the combined current and capital account trend points to a modest appreciation of the yuan this year. Citigroup economist Ding Shuang said he expects to see a 1% to 2% rise in the yuan against the dollar over the next 12 months. It advanced 4.7% against the U.S. currency last year.

China's current-account surplus for all of 2011 was $201.7 billion, down 15.2% from 2010.

-Liyan Qi contributed to this article, Dow Jones Newswires; (86 10) 8400-7718; liyan.qi@dowjones.com