Tags: AS | China | Trade

Strong Trade Data Pushes China to Let Yuan Rise

Wednesday, 10 Mar 2010 08:08 AM

 

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China's exports rose in February in a new sign of growing global demand that could help persuade officials to let the Chinese currency rise.

Exports were up 45.7 percent over a year earlier, the Chinese customs agency reported Wednesday, beating analyst forecasts of 35 to 40 percent growth. Imports surged 44.7 percent, the agency said, reflecting growing demand in China as it emerges from the global crisis.

"China's trade is extending its recovery," said Zhu Jianfang, an economist for Citic Securities in Beijing. "Exporters are getting more orders these days."

February's growth rate was boosted by comparison with last year's weak trade amid the global downturn and came despite the weeklong Lunar New Year holiday, when many companies shut down.

Zhu said the data increase chances the government might allow China's currency, the yuan, to rise in value. Beijing has held the yuan steady against the dollar for 18 months to help Chinese exporters but is under pressure from Washington and other trading partners that say it is undervalued and is swelling China's trade surplus.

Combining data from January and February shows exports surged 31.4 percent during the period from a year earlier, the customs agency said. Analysts say looking at that two-month period compensates for the distortion of the Lunar New Year holiday and produces a more accurate picture of China's trade.

In a reflection of stronger global trade, China's total February imports and exports were up 45.2 percent from the same month last year. China overtook Germany in 2009 as the world's top exporter.

China's central bank governor, Zhou Xiaochuan, said Saturday that Beijing will be "very cautious" about easing exchange-rate controls because the global economic outlook is still uncertain.

China's global trade surplus for the January-February period narrowed by 50.3 percent from the same time last year, reflecting surging Chinese demand for imports spurred by its quick rebound from the crisis while the United States and other key export markets are still struggling.

Chinese economic growth accelerated to 10.9 percent in the final quarter of 2009 on the strength of massive stimulus spending and bank loans. That drove demand for imported iron ore and other materials used in stimulus-financed construction projects.

"Stronger domestic demand led to the good performance of imports," said Liu Qiyuan, an economist for China Merchant Securities. "We can see the domestic economic is on track for recovery."

China's global trade surplus was $7.6 billion in February and the combined January-February surplus was $21.8 billion.

Its trade surplus with the United States in the January-February period shrank by 27 percent to $20.9 billion. The gap with the 27-nation European Union, China's biggest trading partner, widened by 34 percent to $22.3 billion.

China's combined trade surpluses with its major export markets were larger than its global surplus because it also ran substantial deficits with Australia, Brazil, Taiwan and other suppliers of iron ore, industrial components and other materials needed by its booming export manufacturers.

The commerce minister, Chen Deming, cautioned Saturday that despite stronger recent trade, it will be two to three years before China's exports return to pre-crisis levels.

"With unemployment in the U.S. and EU remaining stubbornly high, and government subsidies to consumption winding down, that recovery will necessarily be a slow process," Tom Orlik, an analyst in Beijing for Stone & McCarthy Research Associates, said in a report.


© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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