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Business

Beijing confims slowdown in trade surplus

Text by News Wires

Latest update : 2010-10-13

China's trade surplus fell to 16.88 billion dollars in September, its lowest level in five months. Strong imports explain the slowdown of the trade surplus as international pressure to let the yuan appreciate keeps growing.

AFP - China's trade surplus shrank in September as growth in exports and imports slowed sharply, official data showed Wednesday, but the decline was unlikely to ease pressure on Beijing for a stronger yuan.
  
The country's trade surplus fell to 16.88 billion dollars in September compared with 20.03 billion dollars in August, and was the lowest surplus in five months.
  
The figures come as China set the yuan's central parity rate -- the middle of the currency's allowed trading band -- at 6.6693 to the dollar, its strongest since a June pledge for limited currency reform.
  
But the data is unlikely to calm angry US and European lawmakers, who are demanding that China let the yuan appreciate faster against the dollar.
  
"I think the pressure is still going to be there," Brian Jackson, a Hong Kong-based senior strategist at Royal Bank of Canada, told AFP.
  
"I think the fact that their exports are still very strong suggests that there's plenty of scope for them to do more on the currency."
  
Some critics claim the yuan is undervalued by as much as 40 percent, giving Chinese exporters an unfair advantage by making their shipments artificially cheap.
  
Beijing vowed in June to let the yuan trade more freely against the dollar. Since then, the currency has advanced around two percent against the greenback.
  
China's exports rose by 25.1 percent in September year-on-year to 144.99 billion dollars, compared with an increase of 34.4 percent in August, the data showed.
  
Imports rose 24.1 percent on-year in September to a record-high 128.11 billion dollars, but slower than the 35.2 percent growth recorded in August, the report said.
  
The slower growth was due to the high base effect last year rather than weakness in the global economy, Bank of America-Merrill Lynch analyst Lu Ting said in a research note.
  
Beijing-based Citigroup economist Ken Peng told AFP that despite the slowdown in exports and imports growth last month, the data remained very strong and would "not stop the calls for more appreciation" in the currency.
  
China has repeatedly rejected demands for a sharp rise in the yuan, with Premier Wen Jiabao telling European lawmakers last week that such a move would destroy Chinese businesses and fuel social instability by triggering job losses.
  
"The world will by no means benefit from a crisis in the Chinese economy," Wen added, pledging to "gradually allow more flexibility in the yuan exchange rate while maintaining its basic stability".
  
While China has said it wants to reduce its heavy reliance on exports to drive the economy, the export sector remains a massive employer in the country of 1.3 billion people.
  
China's top central banker Zhou Xiaochuan, in Washington last week for an annual International Monetary Fund meeting, said the yuan would move gradually towards an "equilibrium" level but rejected any "shock therapy".
  
The country's foreign exchange regulator said Tuesday that reforming the yuan exchange rate did not equate to currency appreciation and that market players should get used to "two-way fluctuation in the yuan exchange rate".

Date created : 2010-10-13

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