China’s trade surplus soared last month to hit a record, as the steeply falling price of oil, iron ore and other commodities reduced the cost of imports even as China’s exports continued to capture a growing share of world markets.
China’s General Administration of Customs announced yesterday that the country’s trade surplus had jumped to US$54.47 billion, easily breaking the previous record set in August of US$49.87 billion.
Chinese exports have become even more competitive abroad after China’s central bank intervened aggressively in currency markets earlier this year to hold down the value of the yuan, and appears to have done so again in recent weeks.
Photo: AFP
The huge trade surplus comes as China’s stock market has emerged as one of the world’s best performers this autumn. It has climbed 23.5 percent since the central bank cut interest rates on Nov. 21, including a gain of 2.1 percent in initial trading yesterday morning following the release of the trade figures.
The export and import data released yesterday nonetheless showed some signs of weakness in the Chinese economy. Exports were up 4.7 percent from November of last year, somewhat less than foreign economists expected, while imports dropped 6.6 percent. Many foreign economists had expected a small increase.
Julian Evans-Pritchard, an economist in the Singapore office of Capital Economics, a macroeconomic research company, said that the data had been distorted somewhat by imports and exports of precious metals carried out to avoid China’s many controls on transferring large sums of money in or out of the country.
Exports are likely to fare reasonably well in the coming months, he wrote in a research note, while adding that: “In contrast, import growth is likely to remain weak given the ongoing structural slowdown in investment.”
Prices have plunged not only for imported raw materials such as oil, but also for semi-processed goods such as plastic and steel that are made from oil and other commodities.
However, falling commodity prices have not necessarily fattened the profits of Chinese manufacturers, as ferocious competition among them and chronic overcapacity have forced them to pass much of the savings on to their customers.
“Raw material costs have come down recently, though it is still very competitive since the costs have come down also for other manufacturers in China — however, it has allowed us to be more flexible on pricing,” said Cherry Jiang, a sales executive at Wuxi Redhot Industries Co, a maker of plastic lunchboxes and other plastic containers in Wuxi, a city in eastern China’s Jiangsu Province.
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