Exports up, imports down

China's exports surged last month, but imports fell due to weak domestic demand, Customs reported Tuesday.

Exports increased 38.1 percent to $145.5 billion compared to the same time last year, down from the 43.9 percent growth in June. Import volume climbed to $116.8 billion, up only 22.7 percent compared with 34.1 percent in June, the General Administration of Customs said.

China's import volume decrease was driven by the central government's strong measures to stop the massive bank lending and to restrain housing prices and property speculation that started at the end of last year. These measures have slowed the country's economy and domestic demand.

According to the National Bureau of Statistics (NBS), Gross domestic product (GDP) growth slowed from the first quarter's 11.9 percent to 10.3 percent in the second quarter.

July's Purchase Management Index, an indicator of manufacturing sector strength, fell to 51.2 from 52.1 in June, the lowest level since March 2009.

Crude steel consumption went from growing at 27.41 percent in January to a contraction of 1.14 percent in June, the China Iron &Steel Association said.

Meanwhile, July's rising exports pushed up China's monthly trade surplus to $28.7 billion, the highest level since January 2009.

According to the People's Bank of China (PBC), the country's central bank, China's foreign reserves jumped to $2.4 trillion last year, further increasing inflation pressures.

China's Consumer Price Index (CPI) rose 2.9 percent in June compared to the same time last year. The index rose a year-on-year 3.1 percent in May and 2.8 percent in April, data from the NBS showed.

The country's food prices account for about a third of the index. Prices of pork grew over 17 percent compared to June; and China increased wheat reserves, anther move viewed to push up inflation pressures as wheat demand increases.

Since June, the National Development and Reform Commission, the country's top economic planner, has not adjusted the domestic oil prices while the international crude prices have plunged.

The July's growing exports will also add pressure on the Chinesegovernment to revalue its currency.

The PBC started reforms in June, making the yuan reflect supply and demand according to a basket of designated currencies, instead of pegging to the US dollars, as it has been since 2008.

"The two developments will only add to Washington's insistence on a stronger renminbi and to Beijing's resistance," the Financial Times quoted Ben Simpfendorfer, an economist at RBS in Hong Kong, as saying.

Source: Global Times