Beijing (AFP) Nov 12, 2007
China said on Monday its politically sensitive trade surplus in October topped 27 billion dollars for the first time, data sure to add to mounting pressure by the US and EU over Chinese trade policies.
Sizzling exports pushed the surplus to 27.1 billion dollars in October, the customs bureau said, just weeks before high-level US and EU delegations, plus French President Nicolas Sarkozy, are due in China to press Beijing to let its yuan currency strengthen.
"The record high trade surplus will definitely increase US pressure to raise the yuan's value," said Shi Lei, an analyst with Beijing-based TX Consulting.
Chinese exports in October jumped 22.3 percent to 107.7 billion dollars over the same month last year, pushing the monthly surplus figure just beyond the previous record set in June of 26.9 billion dollars.
It also lifted the accumulated surplus for the first 10 months to 212.4 billion dollars, a leap of 59 percent over the same period in 2006, already shattering last year's record 177.5 billion dollars.
Sarkozy, due in China from November 25 to 27 for his first state visit to China, said last week he would pressure Beijing about its "devalued" currency.
"I will go to China and I will tell (them) they have such a spectacular success ... you don't need to have a currency so devalued to succeed," he said during a visit to Washington.
He will be followed shortly after by an EU delegation led by European Central Bank chief Jean-Claude Trichet and one led by US Treasury Secretary Henry Paulson in Beijing. Both will convey similar messages.
The European Commission's ambassador to China, Serge Abou, said Monday that Europe was running out of patience.
"We cannot sustain indefinitely... increasing and increasing deficits," he told reporters at a Beijing news conference on the EU delegation's late-November visit. "We want more attention to our needs and requirements."
Analysts said anticipated foreign pressure likely played a role in creating October's record surplus as Chinese enterprises rushed out exports ahead of an expected future stronger yuan.
A stronger yuan makes Chinese exports more expensive overseas.
"I think the main reason is the expectation for the yuan appreciation. The speed of renminbi appreciation has not been fast enough, prompting the exports," TX Consulting's Shi told AFP.
The October figure actually came in lower than some analysts' forecasts, however, due mainly to 25.5 percent growth in imports during the month, which reached 80.7 billion dollars.
The surplus would have been higher if not for factors boosting the value of imports, such as the inflationary impact of higher oil prices, according to some experts.
"Government policies to encourage consumption and imports might have also played a role," said Zhang Ming, a researcher with the Chinese Academy of Social Sciences.
But the pace of import growth could slow if a series of government monetary-tightening steps aimed at reining in the domestic economy begin to bite, Goldman Sachs said.
"Without a meaningful adjustment in the (yuan), such tightening will likely lead to a slowdown in domestic demand, and therefore import demand," it said in a research note after the data was released.
China also said foreign direct investment into China, a leading indicator of future export and business activity, increased by 13.2 percent in October compared with the same month a year ago.
Foreign enterprises invested 6.8 billion dollars in China last month, the commerce ministry said.
China de-linked the yuan from the US dollar in 2005 and has since allowed it to rise about 10 percent against the greenback.
China has resisted calls for more rapid appreciation, saying it will allow it to strengthen only gradually to avoid disrupting its economy.
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Global Trade News
US trade gap narrows to two-year low despite oil, China
Washington (AFP) Nov 9, 2007
The US trade deficit fell to a two-year low in September as a weak dollar fueled record exports, offsetting the impact of surging oil prices and a widening shortfall with China, data showed Friday.
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