Friday, February 15, 2008

Sharp jump in China trade surplus

By BBC News - Friday, 15 February 2008China's trade surplus soared 19.5% in January as the economy continued to boom despite efforts to cool the rate of growth, official figures have shown.
The surplus - the gap between what China exports and what it imports - grew to $22.7bn (£11.5bn) last month, compared with $15.9bn a year earlier.

China's exports in January increased 26.7% to $109.7bn, the biggest year-on-year rise in six months.

Imports rose 27.6% to $90.2bn, the biggest increase in almost two years.

Yuan dispute

The latest trade surplus figure was bigger than market estimates and is likely to renew criticism from the US and European Union, who have accused China of undervaluing the yuan to make its exports artificially cheap.

While Beijing still does not allow the yuan to float freely against other currencies, it counters that the currency's value has increased by 13% since 2005.

The Chinese government also argues that it cannot move any faster on liberalising the yuan for fear it could destabilise the country's export-led economic boom.

China has instead moved to cool both exports and its overall breakneck economic growth through policies such as increased taxation, interest rate rises and limits on how much money banks can lend to businesses.

Analysts said it would now be interesting to see how China's exports were affected by continuing recession fears in the US.

"The first point is that we haven't really seen any significant softening of the growth numbers in terms of both exports and imports," said Yiping Huang, chief China economist with Citigroup in Hong Kong.

"The trade surplus figure is a bit lower than in the previous months, but still very strong."

The International Monetary Fund said on Friday that the Chinese economy is likely to grow by 10% this year, down slightly from 11.4% in 2007.
Read more in BBC NEWS

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