China posts record trade surplus despite global crisis

China posts record trade surplus despite global crisis


BEIJING

Wednesday, November 12, 2008

CHINA said yesterday its trade surplus hit a monthly all-time high of US$35.2 billion ($52.7 billion) in October, as exports remained strong despite the global economic turmoil.

The surplus, up 29.9 per cent from a year ago, reflected demand for China's exports outside the United States and Europe, but it was also the result of a marked slowdown in imports.

Experts said China's trade would soon show more clearly the impacts of the global economic woes, with export growth set to slow following reports already of many factories dependent on overseas sales facing deep difficulties.

"It is not very likely that such fast growth in the surplus will be sustained," said Qi Jingmei, a researcher with the State Information Centre, a Beijing-based government think tank.

Exports in October rose 19.2 per cent from a year ago to US$128.3 billion, compared with 21.5 per cent growth in September, according to the data from the Customs Administration. Qi highlighted the diverse markets for China's exports as one reason for the continued solid performance despite problems selling to the struggling developed markets.

"The demand from Africa, Latin America and Russia is still strong although exports to Europe weakened," Qi said.

China's state-run Xinhua news agency also gave prominence to the diversification cushion, reporting that exports to Latin America grew 52 per cent in the first nine months to US$111.5 billion.

A slowdown in import growth, rising 15.6 per cent in October from a year earlier to US$93.1 billion, was another important factor.

"Import growth fell by large margins, which made the trade surplus look high," said Li Huiyong, a Shanghai-based economist with Shenyin Wanguo Securities.

Since a large portion of China's imports are of input that get assembled and then re-exported, the trend could also signal further declines in exports in the months ahead, according to observers.

The more moderate rise in imports was also seen to reflect sharp declines in the price of oil and other commodities.

In the first 10 months, the trade surplus — long a source of friction with Europe and the United States — totalled US$216 billion, according to the customs authorities' data.

This marked a slight increase from US$212.4 billion in the same period last year, according to previously released Customs figures. The previous monthly record surplus was US$29.4 billion in September.

Qi of the State Information Centre said the latest figures offered some momentary relief for the Chinese government as it battles to limit the impacts of the global economic crisis at home. "A large trade surplus is what the government currently would like to see," she said.

"It can reduce some pressure on the government's policy making if exports rebound."

However the widening trade surplus could put pressure on China to raise the value of its currency, the yuan, which has stayed at roughly the same level against the dollar since April.

US president-elect Barack Obama said during his campaign that China's huge trade surplus with the US was related to its manipulation of its currency.AFP