China’s trade surplus narrowed last year for the second straight year, giving Beijing grounds to rebuff US pressure for faster currency appreciation ahead of Chinese President Hu Jintao’s (胡錦濤) visit to Washington next week.
The Chinese government will point to the latest numbers as evidence that it is making steady progress in rebalancing its economy toward domestic consumption, cutting reliance on exports and giving the world a lift through surging demand for imports.
For the US, however, this may be happening too slowly, with the politically sensitive bilateral trade gap between the world’s two biggest economies widening further last year.
However, last month was consistent with what has been a pattern since the outbreak of the global financial crisis more than two years ago. With the Chinese economy growing much faster than the rest of the world, imports outshone exports.
China’s exports last month rose 17.9 percent from a year earlier and imports increased by 25.6 percent, the customs agency said yesterday.
That left the country with a trade surplus of US$13.1 billion, well down from analysts’ expectations of a US$20 billion figure and the lowest in eight months.
“Imports are much stronger than we have expected, indicating that the domestic investment and internal demand are mainly pushing up domestic consumption,” said Wang Han, an economist at advisory firm CEBM in Shanghai.
For all of last year, China’s trade surplus was US$183.1 billion, down 7 percent from US$196.1 billion in 2009. The surplus had fallen 34 percent in 2009 from its pre-crisis peak of nearly US$300 billion in 2008.
“This could reduce the pressure for yuan appreciation and also remove some pressure for the central bank to imminently launch aggressive tightening,” said Wang Hu, an economist with Guotai Junan Securities.
Along with quickening the pace of yuan gains, the government raised interest rates twice and banks’ required reserves six times last year to rein in inflation.
A smaller trade surplus means that less money is flowing into China, decreasing the central bank’s urgency to mop up the excess cash in the economy that has pushed prices higher.
Beijing has let the yuan rise 3 percent against the US dollar since mid-June, when it lifted the currency from a nearly two-year peg that cushioned the economy from the impact of the global financial crisis.
Critics in the US say that China keeps the yuan cheap to give its exporters an unfair advantage in selling their wares to the world.
These long-standing complaints have taken on added potency in the wake of the financial turmoil that has left the US with an unemployment rate of 9.4 percent.
However, Beijing has counseled for patience, repeatedly pledging to reduce its economy’s reliance on exports and to seek a more balanced trade relationship with the rest of the world.
It has begun to move in that direction on the back of surging imports of oil, iron ore, copper and other raw materials needed to fuel its economy.
However, apart from agricultural goods such as soy beans, the US provides few of the commodities sought by China. That mismatch showed in another huge trade gap between the two last year: US$181.3 billion, up 26 percent from 2009, according to the Chinese data.
Trade is just one thorn in the side of China-US relations. The two countries also locked horns last year over deadly North Korean attacks on South Korea, Internet censorship, human rights, South China Sea navigation, climate change and valuable rare-earth minerals.
Hu Jintao will meet US -President Barack Obama in Washington on Jan. 19, an event that is being billed as the most important state visit in 30 years.
There are signs that China’s overall trade surplus, having narrowed in 2009 and last year, could rebound this year.
The export order sub-index in the country’s purchasing managers’ index, a leading indicator of export demand, has been very strong of late, Goldman Sachs economists Yu Song (宋玉) and Helen Qiao (喬虹) noted.
Liu Li-gang (劉利剛), an economist with ANZ in Hong Kong, said that improvements in the US jobs market would also shore up global demand.
“We still see a robust year ahead for China exports,” he said.
The domestic unit of the Chinese-owned, Dutch-headquartered chipmaker Nexperia BV will soon be able to produce semiconductors locally within China, according to two company sources. Nexperia is at the center of a global tug-of-war over critical semiconductor technology, with a Dutch court in February ordering a probe into alleged mismanagement at the company. The geopolitical tussle has disrupted supply chains, with some carmakers reportedly forced to cut production due to chip shortages. Local production would allow Nexperia’s domestic arm, Nexperia Semiconductors (China) Ltd (安世半導體中國), to bypass restrictions in place since October on the supply of silicon wafers — etched with tiny components to
Taiwan is open to joining a global liquefied natural gas (LNG) program if one is created, but on the condition that countries provide delivery even in a scenario where there is a conflict with China, an energy department official said yesterday. While Taiwan’s priority is to have enough LNG at home, the nation is open to exploring potential strategic reserves in other countries such as Japan or South Korea, Energy Administration Deputy Director-General Chen Chung-hsien (陳崇憲) said. While the LNG market does not have a global reserve for emergencies like that of oil, the concept has been raised a few times —
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday received government approval to deploy its advanced 3-nanometer (3nm) process at its second fab currently under construction in Japan, the Ministry of Economic Affairs said in a news release. The ministry green-lit the plan for the facility in Kumamoto, which is scheduled to start installing equipment and come online in 2028 with a monthly production capacity of 15,000 12-inch wafers, the ministry said. The Department of Investment Review in June 2024 authorized a US$5.26 billion investment for the facility, slated to manufacture 6- to 12nm chips, significantly less advanced than 3nm process. At a meeting with
Standard Chartered Taiwan on March 26 announced that it has partnered with international fintech firm FinIQ to build an “Automated Structured Products Pricing Platform.” The bank is also introducing products from global issuers including Goldman Sachs Group Inc, Barclays PLC and BNP Paribas SA. The new platform enables an end-to-end process whereby it finds the most competitive pricing across multiple issuers in a matter of minutes, followed by automated documentation and transaction execution, which significantly shortens time-to-market and delivers a superior wealth management experience. Standard Chartered Bank Taiwan CEO Anthony Yu (游天立) said: “Standard Chartered is increasingly leveraging its wealth management
RSS