China’s exports weaken, surplus drops to $17B
China's export growth fell in October but its trade surplus with the U.S. widened, possibly fueling frictions with Washington.
BEIJING: China’s export growth fell in October but its trade surplus with the U.S. widened, possibly fueling frictions with Washington.
Exports rose 15.9 per cent to $157.5 billion, still robust but down from September’s 17.1 per cent rise. Imports gained 28.7 per cent to $140.5 billion, up from the previous month’s 20.9 per cent increase.
China’s monthly trade surplus with the 27-nation European Union, its biggest export market, fell 10.3 per cent from a year earlier to $13 billion as euro zone countries struggle to contain a sovereign debt crisis that has already engulfed Ireland, Portugal and Greece and now threatens Italy.
“The tumultuous events in the eurozone are weighing heavily on China’s exports,” said IHS Global Insight analyst Alistair Thornton in a report.
Export weakness might pressure Beijing to reverse interest hikes and other curbs imposed to cool its overheated economy.
China’s global trade surplus narrowed to $17 billion from $27.1 billion during the same period last year. But the surplus with the U.S. widened by 11.1 per cent to $20 billion despite weak American consumer demand due to high unemployment.
That might fuel pressure from American lawmakers for sanctions on Chinese goods to compel Beijing to ease exchange-rate controls and other curbs that critics say give its exporters an unfair price advantage and hurt foreign competitors.
The issue is especially volatile at a time when Washington and other Western governments are trying to boost exports to revive growth and reduce high unemployment.
Critics say Beijing keeps its yuan unfairly undervalued. The currency has been allowed to rise gradually in tightly controlled trading but the increase has slowed in recent months in an apparent effort to help Chinese exporters compete. Analysts expect China to allow no more than a five-per-cent gain in the coming year—too little to satisfy critics.
The U.S. Senate approved a bill last month that would allow Washington to impose sanctions on China or other governments that manipulate their currencies for trade advantage. Leaders of the lower House of Representatives have refused to schedule a vote on the measure and the Obama administration has expressed reservations about it.
Beijing has tightened economic controls to steer growth to a more sustainable level after last year’s 10.3 per cent expansion, but the International Monetary Fund is forecasting growth of about 9.5 per cent this year.
Other economies are looking to China to help drive global demand, though its high trade surplus means fewer of the gains are shared with other countries.
China’s import strength is a boost to exporters of iron ore and other commodities such as Australia and Brazil, Asian suppliers of industrial components and Western producers of factory equipment and consumer goods.
China’s trade surpluses with its major Western export markets often are larger than its global surplus because it runs large deficits with suppliers of oil and other raw materials.
Export growth has fallen steadily since hitting a peak of nearly 36 per cent in March.