Sun, Oct 14, 2012 - Page 13 News List

Chinese exports increase by 9.9 percent

THE PARTY’S POLICIES:Ahead of the upcoming once-a-decade leadership transition, the People’s Bank of China has refrained from cutting interest rates since July

Bloomberg

A boy drives a remote-controlled car on a school athletics ground in Gaomi in eastern China’s Shandong Province yesterday. Chinese exports rose 9.9 percent last month year-on-year to a record high for a single month, the government said, indicating resilience in the country’s trade despite an economic slowdown.

Photo: AFP

China’s exports grew at the fastest pace in three months last month, easing concerns that the global economy is heading for the first recession since 2009.

Overseas shipments increased 9.9 percent from a year earlier, the customs administration said yesterday in Beijing. That was more than the 5.5 percent median estimate in a survey of economists and a 2.7 percent gain in August. Imports rose 2.4 percent, leaving a US$27.67 billion trade surplus, the biggest since June.

The IMF warned this week of an alarmingly high risk of a deeper global slowdown unless officials in the US and Europe address threats to their economies. China’s widening trade surplus may provide ammunition to US Republican presidential candidate Mitt Romney, who pledges to designate the nation a currency manipulator if elected, a step the US government has not taken since 1994.

“Recession in the eurozone, the possible fiscal cliff in the US and the dispute with Japan will likely cap the upside” to China’s export growth in the months ahead, said Ding Shuang (丁爽), a Hong Kong-based economist with Citigroup Inc, referring to looming US spending cuts and tax increases that could limit that nation’s demand for exports.

The IMF’s steering committee today added to cautions on the global outlook, saying in a statement in Tokyo that policymakers “need to act decisively to break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth.”

Yesterday’s trade report was after data on Friday that showed slower-than-forecast loan growth last month and ahead of inflation and gross domestic product numbers next week.

The central bank said yesterday that M2, the broadest measure of money supply, rose 14.8 percent last month, the fastest pace since June last year. The nation’s foreign-exchange reserves, the world’s largest, rose to US$3.29 trillion at the end of last month from US$3.24 trillion at the end of June, it said.

Premier Wen Jiabao (溫家寶) is struggling to reverse a slowdown without swelling bad loans or fueling inflation as the Chinese Communist Party prepares for a once-a-decade leadership transition starting next month. The People’s Bank of China has refrained from cutting interest rates since July, in contrast with its counterparts in South Korea, Brazil and Australia.

The IMF this week reduced its estimate for China’s growth this year to 7.8 percent, which would be the weakest pace since 1999, from 8 percent. Meanwhile, Alcoa Inc, the largest US aluminum producer, reduced its forecast for global consumption of the metal on slowing Chinese demand.

Banks extended 623.2 billion yuan (US$99.5 billion) of local currency loans, the People’s Bank of China said on its Web site on Friday. That compared with the median estimate of 700 billion yuan in a Bloomberg survey of economists.

“We could see China’s export growth maintained at 8 to 9 percent in the fourth quarter,” said Liu Li-Gang (劉利剛), a Hong Kong- based economist with Australia & New Zealand Banking Group Ltd, citing improved US consumer sentiment and favorable earlier bases for comparison. “But growth of more than 10 percent is unlikely as a recession in Europe won’t change China’s export outlook there.”

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