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Monday, 15 March 2010
Import surge shrinks China’s trade surplus
China’s trade surplus shrank to the lowest level in a year last month as a surge in imports signalled the nation may start to outshine the United States as a destination for the world’s goods.
It is down to lowest level in a year; trade may prove a drag on expansion
11 March 2010
China’s trade surplus shrank to the lowest level in a year last month as a surge in imports signalled the nation may start to outshine the United States as a destination for the world’s goods.
Imports rose a more-than-estimated 44.7 per cent from a year ago, the Customs Bureau reported on its website yesterday. The surplus was US$7.61 billion (S$10.7 billion), and exports gained 45.7 per cent.
The diminishing surplus signals that trade may be a drag on China’s expansion, a contrast with the US, where net exports contributed more to growth in the past two years than any time since the 1940s. While China’s exports are also rising, policymakers indicated last week they are seeking more evidence of a sustained recovery before they will let the yuan appreciate.
Seasonal factors affected the January and February figures because of a shift in the Chinese New Year holiday to February this year from January last year.
The export gain last month was more than the 38.3 per cent median estimate in a Bloomberg News survey of 28 economists. Imports topped a 38 per cent estimate and the trade surplus was in line with forecasts.
‘The sustained strength in China’s imports is a source of support for the global economy,’ said economist David Cohen of Action Economics in Singapore.
China’s gross domestic product grew 10.7 per cent in the fourth quarter from a year earlier, the fastest pace in two years.
After overtaking the US as the biggest auto market and Germany as the largest exporter last year, China is poised to surpass Japan this year as the second-largest economy. It will contribute more than a third of global growth this year, according to Nomura Holdings.
China, the world’s biggest exporter, is monitoring global demand as officials consider ending crisis policies that include keeping the yuan pegged to the US dollar since July 2008 to aid sales in overseas markets.
Central bank governor Zhou Xiaochuan said last Saturday that policymakers must be ‘very cautious’ in timing an exit as a world recovery is not yet solid.
A stronger yuan could help restrain inflation, which accelerated last month to the fastest pace in 16 months, according to a Bloomberg News survey of economists. The price data is due to be released today. Inflows of speculative capital have also added pressure for the yuan to rise, the nation’s currency regulator said yesterday.
Still, declines in the trade surplus ‘could reduce expectations of yuan appreciation’, Mr Alaistair Chan, an economist at Moody’s Economy.com in Sydney, said in a note before yesterday’s data.
Beijing is also concerned at the toll that the yuan’s appreciation may take on exporters, pushing up the prices of the nation’s goods in overseas markets.
China has kept its currency at about 6.8 per dollar since July 2008. Record loan growth is threatening to stoke inflation and has prompted the central bank, twice this year, to raise the amount of cash banks must set aside as reserves.
Separately, state media said yesterday that Chinese banks extended about 700 billion yuan (S$144 billion) in new loans last month, half that of January, as the government clampdown on lending took hold. The figure reported by the official China Securities Journal, down from 1.39 trillion yuan the month before, is in line with forecasts.
Persuading China to allow the yuan to climb this year is one of US President Barack Obama’s stated goals. A group of 15 senators last month called for stiffer tariffs on Chinese imports, saying an undervalued currency gives Chinese exporters an unfair advantage.
The pressure came even after a turnaround in the US’ own trade figures. Net exports have contributed more than one percentage point to US gross domestic product the past two years, the first time that has happened since 1946-47, Commerce Department data shows. The department is scheduled to report January trade figures today.
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Import surge shrinks China’s trade surplus
It is down to lowest level in a year; trade may prove a drag on expansion
11 March 2010
China’s trade surplus shrank to the lowest level in a year last month as a surge in imports signalled the nation may start to outshine the United States as a destination for the world’s goods.
Imports rose a more-than-estimated 44.7 per cent from a year ago, the Customs Bureau reported on its website yesterday. The surplus was US$7.61 billion (S$10.7 billion), and exports gained 45.7 per cent.
The diminishing surplus signals that trade may be a drag on China’s expansion, a contrast with the US, where net exports contributed more to growth in the past two years than any time since the 1940s. While China’s exports are also rising, policymakers indicated last week they are seeking more evidence of a sustained recovery before they will let the yuan appreciate.
Seasonal factors affected the January and February figures because of a shift in the Chinese New Year holiday to February this year from January last year.
The export gain last month was more than the 38.3 per cent median estimate in a Bloomberg News survey of 28 economists. Imports topped a 38 per cent estimate and the trade surplus was in line with forecasts.
‘The sustained strength in China’s imports is a source of support for the global economy,’ said economist David Cohen of Action Economics in Singapore.
China’s gross domestic product grew 10.7 per cent in the fourth quarter from a year earlier, the fastest pace in two years.
After overtaking the US as the biggest auto market and Germany as the largest exporter last year, China is poised to surpass Japan this year as the second-largest economy. It will contribute more than a third of global growth this year, according to Nomura Holdings.
China, the world’s biggest exporter, is monitoring global demand as officials consider ending crisis policies that include keeping the yuan pegged to the US dollar since July 2008 to aid sales in overseas markets.
Central bank governor Zhou Xiaochuan said last Saturday that policymakers must be ‘very cautious’ in timing an exit as a world recovery is not yet solid.
A stronger yuan could help restrain inflation, which accelerated last month to the fastest pace in 16 months, according to a Bloomberg News survey of economists. The price data is due to be released today. Inflows of speculative capital have also added pressure for the yuan to rise, the nation’s currency regulator said yesterday.
Still, declines in the trade surplus ‘could reduce expectations of yuan appreciation’, Mr Alaistair Chan, an economist at Moody’s Economy.com in Sydney, said in a note before yesterday’s data.
Beijing is also concerned at the toll that the yuan’s appreciation may take on exporters, pushing up the prices of the nation’s goods in overseas markets.
China has kept its currency at about 6.8 per dollar since July 2008. Record loan growth is threatening to stoke inflation and has prompted the central bank, twice this year, to raise the amount of cash banks must set aside as reserves.
Separately, state media said yesterday that Chinese banks extended about 700 billion yuan (S$144 billion) in new loans last month, half that of January, as the government clampdown on lending took hold. The figure reported by the official China Securities Journal, down from 1.39 trillion yuan the month before, is in line with forecasts.
Persuading China to allow the yuan to climb this year is one of US President Barack Obama’s stated goals. A group of 15 senators last month called for stiffer tariffs on Chinese imports, saying an undervalued currency gives Chinese exporters an unfair advantage.
The pressure came even after a turnaround in the US’ own trade figures. Net exports have contributed more than one percentage point to US gross domestic product the past two years, the first time that has happened since 1946-47, Commerce Department data shows. The department is scheduled to report January trade figures today.
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