High trade surplus 'likely to remain'

11:01, August 11, 2010      

Email | Print | Subscribe | Comments | Forum 

The country's high trade surplus will likely remain for the rest of the year as domestic demand continues to shrink from government attempts to curb the property bubble, Chinese analysts have said.

Exports in July shot up 38.1 percent from the same period last year, bringing trade surplus to a 18-month high of $28.7 billion and beating common forecasts, figures from the General Administration of Customs showed on Tuesday. But imports grew only 22.7 percent year-on-year, at a much slower pace than expected.

In July, exports grew to $145.5 billion and imports increased to $116.8 billion.

The higher trade surplus "was mainly driven by the larger-than-expected slowdown in imports", said Nomura Global Economics in a note on Tuesday.

Growth in imports fell to 22.7 percent, from 34.1 percent in June, although China's imports from the United States and European Union reached the highest since February, rising by 33 percent for US imports and 34 percent for EU imports year-on-year, Customs figures showed.

Despite the strong growth of imports in auto, grain, mechanical and electrical products, imports of industrial goods, including crude oil, iron ore, copper and finished steel products, all fell.

These reflected "weakening commodity prices, shutdown of inefficient and heavily polluting producers, and flooding which caused weak manufacturing activity", Nomura said.

As government policies on curbing real estate speculation continue and commodity prices are expected to stay low, the country's imports of "most industrial materials" will continue to shrink, said Yan Jinny, an economist from Standard Chartered Shanghai.

Trade surplus will stand at above $20 billion in the coming months, she said.

Li Jian, a senior researcher of the Academy of International Trade and Economic Cooperation affiliated to the Ministry of Commerce, agreed.

"In the rest of the year, the trade surplus is very likely to range from $20 billion to $25 billion," Li said.

"China's export growth has stayed surprisingly resilient, as the European debt woes are yet to exert negative impact on the demand for the nation's goods. We will have to wait to see the real impact until September when Christmas orders are made," Yan said.

For the rest of the year, slowdown in export growth will continue but it will be moderate, as China's exporters are shifting more focus onto Asian and emerging markets from the US and EU, Yan said.

Exports to South Korea and Singapore accelerated to 40.3 percent and 11.2 percent in July, from 37.4 percent and 8.4 percent in June, Customs figures showed.

Analysts said China must also be prepared for a fresh round of international pressure led by the US to raise the value of the yuan, as the US and EU will possibly "launch more trade remedy cases against China" in the second half of the year.

A number of analysts worry that the large surplus will give developed nations such as the US a good excuse to further pressurize China on its trade policies.

"Anti-dumping and anti-subsidy cases against China, especially from the US, will grow in the second half," said He Weiwen, deputy director of the China Institute for Open Economy of the University of International Business and Economics.

Over the weekend, the US said in its preliminary ruling that it will impose anti-dumping duties as high as 429 percent on imports of drill pipe used for oil wells from China.

Yan from Standard Chartered said "a sizable trade surplus means that the Chinese government has less justification to interrupt the appreciation of its currency".

A number of trade experts have called on the Chinese government to launch more policies to stimulate imports, especially high-tech and valued-added products, to balance the foreign trade and to fend off the criticisms.

Last weekend, the Ministry of Finance, together with four other ministries, released a policy on remitting import value-added tax and import tax on selected high-tech products, which analysts said is a sign that China is taking imports seriously.

Source:China Daily


  • Do you have anything to say?


Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • Staff members watch a screen showing the blast-off of the Long March-2FT1 carrier rocket loaded with Tiangong-1 unmanned space lab module at Beijing Aerospace Control Center, Sept. 29, 2011. Commander-in-chief of China's manned space program Chang Wanquan announced Thursday night that the launch of Tiangong-1 space lab module was successful. (Xinhua/Wang Shen)
  • Chinese President Hu Jintao watches the launch of Tiangong-1 space lab module at Beijing Aerospace Control Center in Beijing, capital of China, Sept. 29, 2011. Other members of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, including Wu Bangguo, Jia Qinglin, Li Changchun, Xi Jinping, Li Keqiang and Zhou Yongkang, are also present. (Xinhua/Rao Aimin)
  • The graphics shows the launch procedures of the carrier rocket of Tiangong-1 space lab module, Long March-2FT1 on Sept. 29, 2011. (Xinhua/Lu Zhe)
  • Image taken from Beijing Aerospace Control Center shows a Long March-2FT1 carrier rocket loaded with Tiangong-1 unmanned space lab module blasting off from the launch pad at the Jiuquan Satellite Launch Center in northwest China's Gansu Province, Sept. 29, 2011. (Xinhua)
  • On Sept. 28, tourists travel around the Mingshashan Scenic Area in Dunhuang, Gansu province by camel. With the National Day vacation right around the corner, more and more tourists from home and abroad are going to Dunhuang. Riding on a camel, they travel in the desert to enjoy the cities rare form of natural scenery. (Xinhua/Zhang Weixian)
  • Chinese forest armed forces work together with forest firefighters on Sept. 28. (Xinhua/Chai Liren)
Hot Forum Discussion