Thursday 13 October 2011

CHINA’S FOREIGN TRADE

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CHINA TRADE SURPLUS SHRINKS AS GLOBAL WOES DEEPEN

Langi Chiang and Koh Gui Qing

Reuters, October 13, 2011

China's trade surplus narrowed for a second straight month in September to $14.5 billion, with both imports and exports lower than expected, reflecting global economic weakness and domestic cooling that will deepen policy quandaries facing Beijing.

The trade data issued on Thursday laid bare trends at the heart of Beijing's debate about how to handle U.S. pressure for a higher yuan while seeking to protect both export-driven jobs and tame inflationary pressures.

Moments after the data was released, a deputy chief of China's customs agency staked out one position in that debate, saying a higher yuan is already hurting exports.

"The rise in the renminbi exchange rate may limit the room for export growth," Lu Peijun, the deputy head of the Chinese customs administration, said at a news conference about the data. The renminbi is another name for the yuan.

"China is still facing relatively big imported inflationary pressure and trade conditions are also deteriorating," said Lu.

Many traders are already wagering Beijing will tighten its leash on the yuan, which fell against the dollar on Thursday after the central bank set a sharply weaker mid-point for daily trading. Forwards markets are pricing in depreciation of the currency in the year ahead.

But other influential Chinese voices, including an official newspaper on Thursday, say Beijing may be preparing for a widening of the yuan's daily trading band to help fend off speculators and inflation.

September's trade surplus was smaller than August's $17.8 billion and less than half of the $31.5 billion recorded in July. The annual pace of exports to the troubled European Union more than halved from August.

(...) [artículo aquí]

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