Tags: China | Stronger | Trade | Surplus

China Posts Stronger Trade Surplus Ahead of G-20

Wednesday, 10 Nov 2010 07:32 AM

China's politically contentious trade surplus widened in October, lending fresh ammunition for foreign critics of its currency policy ahead of a G-20 summit.

China's exports rose 22.9 percent in October from a year earlier, and imports increased by 25.3 percent, the official Xinhua News Agency said on Wednesday.

That left the country with a trade surplus of $27.1 billion, compared with a surplus of $16.9 in September.

"The numbers are volatile from month to month — it might be a bit embarrassing for the Chinese government ahead of the G-20 for the trade surplus to bounce like that," said David Cohen, economist at Action Economics in Singapore.

The announcement of the surplus coincided with heated debate on global exchange rate polices in the run-up to a Group of 20 major economics summit in Seoul this week.

The United States has frequently criticized China, saying it deliberately undervalues its currency to boost exports.

In return, China has pointed its finger at the Federal Reserve's new $600 billion bond-buying program, saying the ultra-loose policy is putting pressure on the dollar and will result in a flood of cash flowing into the world economy, inflating asset bubbles.

China's trade surplus for 2010 is likely to reach around $180 billion, smaller than last year's $196 billion, Vice Commerce Minister Zhong Shan said on Nov 6.

China has yielded some ground on the currency, allowing the yuan to gain 2.85 percent since its depegging to the dollar in mid-June.

WEAKENING DEMAND

The slower-than-expected import growth could indicate softening domestic demand as the government wound down its massive economic stimulus unveiled in late 2008.

The median forecast of economists polled by Reuters last week was for exports to rise 23.5 percent and imports to grow 28.5 percent, resulting in a trade surplus of $25 billion.

"Import growth in October was weaker than expected, producing the big trade surplus. Import data usually fluctuates a lot, but the figure also showed that domestic demand in the second half is weak," said Gao Shanwen, chief economist with Essence Securities in Beijing.

"In the next two months, import growth will trend up while export growth will slow. The trade surplus will remain high, bringing pressure on yuan appreciation.

© 2017 Thomson/Reuters. All rights reserved.

   
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China's politically contentious trade surplus widened in October, lending fresh ammunition for foreign critics of its currency policy ahead of a G-20 summit. China's exports rose 22.9 percent in October from a year earlier, and imports increased by 25.3 percent, the...
China,Stronger,Trade,Surplus
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2010-32-10
Wednesday, 10 Nov 2010 07:32 AM
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