Yuan revaluation may remain on back burner

08:14, May 19, 2010      

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The chances of an early revaluation of the renminbi look unlikely and could happen much later than expected, considering that the nation's trade surplus may see steep erosions due to the European debt crisis and the growing trade protectionist measures against China's exports, leading economists and experts said on Tuesday.

A dock worker at the new Qianwan container terminal of Qingdao Port in Qingdao, Shandong province. [Agencies]

Earlier estimates were that the nation would allow the renminbi to rise during the second quarter, with overall gains of 3 to 5 percent for the whole year.

Economists now consider such a move unlikely and expect any currency moves to be deferred till the end of the year with a smaller range and overall gains of 2 to 3 percent.

Ministry of Commerce officials had on Monday indicated that the prospects for the nation's exports were not that hopeful this year and the annual trade surplus may see a big drop.

"The improved trade balance will lay a good foundation for China to implement its macro-economic policy and the currency issue should not be too politicized," said ministry spokesman Yao Jian.

"The growth in imports will, however, far exceed that of exports due to the surging prices for imported goods, and hence the large decline in the trade surplus will not be such a big concern," said Dong Xian'an, a chief economist at Industrial Securities Shanghai.

Dong expects the trade surplus this year to drop by 30 percent to $137.5 billion, compared with $196.1 billion in 2009.

Stimulated by the growing demand for commodities and raw materials, the monthly growth in imports has been outperforming exports since May 2009. That in turn has led to a drop in the nation's trade surplus for seven consecutive months ending April.

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