Houston Community News >> China Posts Record Trade Surplus
9/8/2006 Beijing — China posted a record trade surplus of $18.8 billion in August, far exceeding forecasts and the previous record of $14.6 billion in July, Dow Jones Newswires reported on Friday.
Citing an unnamed source, the news agency said exports in August rose 32.8 per cent from a year earlier to $90.77 billion, while imports rose 24.6 per cent to $71.97 billion. Economists polled by Reuters had expected a surplus of $15 billion based on export growth of 22 per cent, with imports up 19.2 per cent.
If confirmed, the figure would take the rolling 12-month surplus to $135.6 billion from $126.8 billion in July, and would increase pressure on China at next week’s meetings of the International Monetary Fund to let the yuan rise faster. “If that is true, the IMF meeting in Singapore will have more teeth in terms of levying pressure on the Chinese currency,” said Chris Leung, an economist with DBS in Hong Kong.
Leung said he was surprised by the reported surge in exports, especially given evidence of a slowdown in the United States, China’s biggest market. But he added: “The message is the trade surplus is not going to get smaller.”
The official data is due to be released in the coming days. Kent Yau, an economist with Core Pacific-Yamaichi in Hong Kong, agreed that the surplus was likely to keep growing because Chinese exports typically rise as the year wears on to meet Christmas demand in the West.
“I wouldn’t be surprised if we saw month after month of record surpluses for the rest of the year,” Yau said. He said the rising surplus posed a challenge to China’s chosen strategy of letting the yuan rise gradually so exporters with small profit margins have time to adjust.
“Obviously they have to fend off the pressure, and I think this number is only going to add to that pressure,” he said.
In a sign of what can be expected, US Treasury Secretary Henry Paulson called in Hanoi on Friday for China and East Asia to permit greater flexibility in their exchange rates to help bring better balance to global trade and capital flows.
The comments rehearsed the message Paulson is expected to deliver when he attends his first meeting of finance ministers of the Group of Seven industrial nations during the IMF talks. Also speaking in Hanoi, Finance Minister Jin Renqing said Beijing would cooperate to help reduce global imbalances but said China should not be blamed for them. Yau said: “The G7 has recently been toning down the pressure on China, because they know that playing hardball is not going to work with China it just makes things worse.”
(Contributed by International News)