China’s politically sensitive trade surplus expanded to US$31.48 billion last month, as exports rose by a fifth to hit a new record high, the customs agency said yesterday.
The trade surplus — a major point of tension for China’s key trade partners, the US and Europe — was well in excess of June’s US$22.27 billion.
Analysts said the figures, which also outstripped a Dow Jones forecast of US$26.00 billion based on a poll of economists, would add further pressure on Beijing to allow the yuan to appreciate.
China’s major trading partners have long complained that the yuan is deliberately undervalued to give Chinese exporters an unfair advantage.
“The expansion of China’s structural surplus will certainly add more pressure for RMB [yuan] appreciation,” said Alistair Thornton, a Beijing-based China analyst at IHS Global Insight. “Both a weakening dollar and a softening inflation outlook in China will allow authorities to step up the pace of nominal appreciation against the [US] dollar.”
Exports were up 20.4 percent year-on-year to US$175.13 billion — a fresh monthly record — while imports rose by 22.9 percent, the customs agency said on its Web site.
Thornton said last month’s export rebound was partly due to seasonal factors and reflected demand for Christmas-season orders overseas.
“Given that most orders for the next few months have already been placed, it is unlikely that the drastic downward shift in global sentiment will have too big an impact on exports through the short run,” he said. “Nonetheless ... the recent market turmoil will certainly feed into the data towards the end of the year.”
The surge in exports came despite manufacturing activity in China contracting for the first time in a year last month due to Beijing’s efforts to slow the economy and weakening overseas demand, according to HSBC data.
However, some experts said consumer confidence in the US and Europe was likely to hit China’s exports in the coming months.
“The data is slightly above expectations with the wider trade surplus,” said Tang Yunfei (唐雲飛), Beijing-based economist with Founder Securities (方正證券). “But given the situation in the US and eurozone, consumer confidence there is likely to slide in coming months and negatively impact the exports.”
“However, if China takes effective countermeasures, such as more pro-growth policies, maybe it will drive the recovery of confidence globally,” Tang added.
An unprecedented US rating downgrade last week and the ongoing debt crises in the US and Europe have sparked fears of a fresh global recession.
China’s trade surpluses have allowed it to accumulate around US$3.2 trillion worth of foreign exchange reserves, nearly US$1.2 trillion of which are in US Treasury bonds.