June exports hit record high

08:52, July 12, 2010      

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China's trade surplus grew for the third consecutive month in June, as exports saw stronger than expected expansion to reach a record high.

Exports rose 43.9 percent from a year earlier to $137.4 billion in June, the General Administration of Customs (GAC) said over the weekend. The June reading exceeded the peak in July 2008, hitting a new high.

Meanwhile, imports fell short of market expectations to $117.37 billion in June, but still rose 34.1 percent year-on-year. The gap between imports and exports was more than $20 billion, the highest level this year.

A stable global economic recovery shores up overseas demand, while exporters may rush to push products before tax rebates on some exports are to be scrapped Thursday, said Lu Ting, an economist with Bank of America-Merrill Lynch (BoAML) in Hong Kong.

The currency reform that resumed in June is also likely to attract capital inflows by means of exports, Lu added.

The expanding trade surplus will put pressure on yuan appreciation in the near term, he added.

"The exchange rate policy should be forward-looking and stable. A sudden adjustment would affect the economy," Lu Zhengwei, a Shanghai-based senior economist with Indus-trial Bank said.

The strong growth in exports would slow substantially in the coming two to three months, due to a release of demand in advance, Lu at BoAML told the Global Times.

The yuan has appreciated a lot against the euro since April, which might have an impact on the country's exports to the European Union, Industrial Bank's Lu said.

The trade surplus for the whole year is expected to shrink from last year, as imports continued high growth while exports grew at a slower pace, he said.

The gap between exports and imports went down 42.5 percent over last year in the first half of this year, with imports growth higher than exports growth, according to the GAC.

China's foreign exchange reserves also saw a decline in growth.

The foreign exchange reserves rose 15.1 percent year-on-year to total $2.45 trillion as of the end of June, the People's Bank of China announced Sunday.

The figure was $2.44 trillion in March, a 25 percent increase.

But Lu at Industrial Bank warned if investment growth continues to slow and domestic demand further shrinks over the rest of the year, there is a possibility that the trade surplus would remain large.

Source: Global Times


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