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China's trade surplus rises on surprise export surge (2)

(Xinhua)

14:25, August 11, 2011

Zhejiang is the third-largest foreign trade region nationally, with volume reaching a record high of $20.9 billion in July. Guangdong and Jiangsu provinces are the two leading trade regions.

A report from IHS Global Insight, a financial and economic consultancy, also sounded upbeat about export prospects.

"Given that most orders for the next few months have already been placed, a drastic downward shift in global sentiment is unlikely to have too big an impact on exports in the short run," it said.

However, officials and experts remain pessimistic over long-term prospects.

"Weaker growth in the US and Europe means weaker export growth for China," Wang Tao, a Hong Kong-based economist for UBS AG, said in a Bloomberg Television interview on Tuesday.

After Standard & Poor's downgraded the US sovereign credit rating, and the European debt crisis showed signs of spreading to Italy and Spain, overseas demand may suffer, research institute director Zhang Yansheng said.

"Enhancing a competitive edge is the most pressing task for Chinese exporters."

Many manufacturers and exporters said that they are not confident of prospects for the second half of this year, citing the rising costs of labor and raw materials, a rising yuan and weakening demand.

As China's inflation rate hit 6.5 percent in July, the highest in three years, the rising cost of raw materials will be a huge burden for exporters and will squeeze their profits, Han said.

China's import growth in July rebounded to 22.9 percent, from 19.3 percent in June, "partly driven by the government's lowering import duties for major commodities from July 1", the IHS report said.

Despite the slowdown in China's economic growth, "imports will outperform exports in the coming months", UBS economist Wang said.

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