China’s Trade Numbers at January
February 18, 2009
Last week’s trade numbers from China could not have been more dismal. After declining by 2.8 per cent year on year in December, China’s exports plummeted 17.5 per cent in January, placing huge pressure on the country’s manufacturing sector. Already unemployment in China is surging.
Chinese import numbers are even more dismaying. After dropping 21.3 per cent in December, imports fell a staggering 43.1 per cent in January.
At first glance there seems to be a silver lining in the export numbers: they are not as bad as those reported by some other Asian countries. In December, for example, Taiwan’s exports fell by 42 per cent, South Korea’s by 17 per cent and Japan’s by 35 per cent, capping many months of contraction. Less developed Asian countries also performed worse than China, which suggests China may have increased its competitive edge over its trading rivals. But it is precisely this relative outperformance that indicates the severity of the adjustment yet to take place. China’s trade surplus for January was a mind-blowing $39.1bn (€31.1bn, £27.4bn), just under November’s all-time high of $40.1bn and edging out December’s $39bn for second place. In comparison, in the first half of 2008 China’s average monthly trade surplus was an already high $16.7bn. In the second half it surged to $32.9bn.
Pls read the rest of article at Financial Times
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Suggestions By MOC to Support China’s Exports
October 15, 2008
Acording to Nanfang Daily Newspaper, China’s Ministry of Commerce (MOC) has officially made suggestions to the State Council, or the cabinet, to increase tax rebates for certain exporting items including garments, toys and shoes.
The suggestions aiming at preventing exports from sliding more! Here you can read the news from China Daily:
Customs data showed that trade surplus for the first six months shrank to US$99 billion, down by 11.8 percent year-on-year, and the trade surplus in June alone declined by more than 20.6 percent, making it US$5.5 billion less than the previous month.
Exports of the most seriously influenced textile and garment sectors declined by 4.2 percent year-on-year to US$15.5 billion in June, representing the slowest increase in five years.
The sources said last week the State Council required the MOC to hand in a report on China’s foreign trade in the first half of this year.
In the report, the MOC said export enterprises need more time to make adjustments to unexpected challenges such as rising raw material prices, the appreciation of the yuan and the slowdown of US economy, or more firms will close their doors, the newspaper reported.
“Some industries, especially the garment and textile sectors, are facing export difficulties brought by the international economy change and the appreciation of yuan,” said vice minister of commerce Gao Hucheng on Monday.
Gao said the MOC and related parties are working on policy changes accordingly.
The newspaper said the ministry has suggested that policies shift to support the export businesses by increasing tax rebates and slowing down yuan appreciation.
China’s currency, the yuan, last Friday broke the 6.84 mark to set a new high against the weakening US dollar for the second consecutive day.
The newspaper said in its report that the textile export rebate will be increased to 13 percent from 11 percent, and the garment export rebate will be lifted to 15 percent from 11 percent.
“Given the pain of the textile enterprises, it’s just a matter of time before the government shifts its policies,” said Wang Qian, Webtextile.com editor-in-chief was quoted by the newspaer as saying.
At the beginning of the month, Premier Wen Jiabao visited Shanghai and Jiangsu. Last week, other top leaders, including Vice Premier Li Keqiang and Commerce Minister Chen Deming, traveled to export-oriented provinces and visited enterprises, many of which were in the textile sector.
This week, the central economic work conference will be held in Beijing, and the meeting will appraise the macro economy in the first half of this year.
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Rise of yuan – where now for China’s currency?
October 7, 2008
An article published in Xinhua by Zhu Yifan about the course and effects of being rebalanced Renminbi. The writer taking a look at Purchasing Power Parity, Exports,trade surplus and where is the end! Here you can read below:
(Xinhua) — Coming back from a short business trip to Hong Kong, Clare Hu opened her purse and found that she had unintentionally spent half of her monthly salary while browsing through shops and department stores there.
“There are a variety of goods there, and they are much cheaper,” says Hu, a media worker in Shanghai. Her colleagues bought even more. The buys ranged from 2, 000-yuan cameras to a box of milk tea.
Mainland tourist shopping sprees in Hong Kong are becoming a tradition, but such behavior has become much more reckless as yuan has risen in value, increasing its purchase power.
China’s currency, the Renminbi or yuan, has appreciated 20 percent against the U.S. dollar since it was unpegged from the dollar in 2005. The Hong Kong dollar, which is still pegged to the U.S. dollar, has weakened from 1.06 to 0.88 to the yuan.
INCREASED PURCHASING POWER
“With the rapid growth of the Chinese economy, the outbound travel market is expanding,” says Grace Pan, head of travel and leisure research at Nielsen.
Chinese travelers spend on average 2,597 to 3,506 U.S. dollars on an overseas trip, with the amount varying by region, according to the Nielsen China Outbound Travel Monitor report.
Not only are mainland residents traveling abroad to take advantage of the rising yuan, they can sense the change in the domestic market. Prices of imported vehicles, which have been high for years, have been falling slowly for the first five months this year.
According to National Development and Reform Commission monitoring data on consumer product prices in 36 large and medium-sized cities nationwide, the prices of imported vehicles dropped 1.95 percent in May from the previous month,
China imported 171,000 automobiles in the first five months, up59 percent compared with the same period last year. In 2007, the volume of automobile imports saw an annual rise of 37.9 percent. Part of the reason is that international automobile giants made stronger efforts in China this year to make up for reduced sales in the North American market. Chinese consumers, with a currency that is becoming stronger daily, are believed to be becoming more open to buying imported cars.
The market of imported snacks and other foods has been rising at an annual rate of 15 percent in the past five years, according to report on the industrial website sponsored by China National Food Industry Association (CNFIA).
EXPORTS PAINS
In contrast to consumers, exporters have been hurt by the appreciation, which has eroded their profits to crisis point.
“In only half a year, our export cost was pushed up by 10 percent and profit reduced by 40 percent,” says Shen Yaoqing, vice president of Shangtex Holding Co., a major Shanghai-based textile manufacturer that exports about 2 billion U.S. dollars worth of products annually. “Our company is on the brink of failure.”
The problem of Shangtex reflects the dire situation suffered by the export-oriented processing trade that employs up to 40 million people.
Exports have been hailed as one of the country’s three economic growth engines, together with consumption and investment. But the engine is slowing with reduced overseas orders. China’s monthly trade surplus dropped to 20.2 billion U.S. dollars in May, down 10percent from the same month last year, according to the General Administration of Customs.
CHANGE BEHIND THE SCENES
The reverberations of the rapid appreciation of the yuan are deep and complicated. The change was not as simple as a boost in buying power or a squeezed trade surplus.
Behind it lies a shift in the country’s overall economic strategy, driven by recognition that the current export structure won’t support economic development the way it used to.
“China’s currency had been kept in an undervalued state since the 1997 Asian Financial Crisis, and the government in effect used it to finance the imports and exports sector at the cost of its non-trading industries,” says Professor Pan Yingli, of the Shanghai Jiao Tong University management school.
A large profit margin was then created between low production costs paid in undervalued yuan, and the high revenues reaped by selling these products to international clients.
This brought prosperity for the country, but took a heavy toll with high pollution and energy consumption. Too much labor-intensive industry with low-efficiency and little added value stretched supply by demanding evermore manufacturing materials, which pushed up upstream prices. The heavy reliance on overseas markets was detrimental to the establishment of an overall balanced industrial structure in China.
It also created a persistent gap between the well-developed coastal east, which thrived by trading with the outside, and the poor central and western regions in China.
“The structural conflict has accumulated to a stage that demands a solution,” says Pan. “Strengthening the yuan is the rational choice as it helps stabilize inflation and leads to the optimization of industrial structure.”
Studies in east China’s Jiangsu Province found the composition of exported products started to change with appreciation. High-tech goods, machinery and electronic products started to take a greater share at the expense of labor-intensive products, such as textiles, garments and toys.
In the Pearl River delta area, 2,331 shoe makers have gone out of business, and 2,428 remain. Shoe exports were down 15.5 percent to 1.35 billion pairs in the first five months compared with the same period last year, but the value gained 9.4 percent to 3.97 billion U.S. dollars.
WHERE IS THE END
This year, the appreciation has accelerated, breaking through the 7-yuan mark against the dollar in early April before it weakened slightly on a stronger dollar in May. However, it soon regained strength and broke through the 6.9-yuan mark to hit a record 6.8919 to the dollar on June 17. By then, it had appreciated almost 6 percent in 2008 alone.
As China’s currency became increasingly stronger, Liu Yuhui, researcher with Chinese Academy of Social Sciences noticed a dangerous undercurrent of money flows. Observation of statistical data showed that “hot money,” or international short-term speculative funds, is speeding up its flow into China in the first quarter, which was closely related in an anticipation of faster appreciation of the yuan.
No official figures was released concerning the “hot money”, but analysts smelt a rat from the strange phenomenon that combines a ballooning forex reserves and declining current-account surplus and reduced expenditure of foreign investment in China.
During the first five months of 2008, forex reserves increased by 18.7 percent year-on-year, or 268.7 billion U.S. dollars, SAFE figures showed. Jiang Zheng, a macro-economist at a Beijing-based securities firm, has discovered that there was an unexplained 147.9 billion U.S. dollars in the forex reserve increase figure after deducting the trade surplus and the FDI from it.
The concentration of international speculative fund in China’s domestic market would pose major threats to a stable exchange rate of yuan, and also rob a country of effective control of its macroeconomy, says Liu.
Given the complexity of the situation, opinion is divided over whether the appreciation will continue, or whether there will be a one-off appreciation to end the uncertainty. Guesses are made at the so-called ceiling of the yuan.
Central bank governor Zhou Xiaochuan says China would gradually expand the elasticity of the exchange rate, sending out the signal that Beijing would let the yuan fluctuate rather than rise unilaterally.
The fast appreciation of the yuan in the first half might not continue, and the concern over possible fallback of foreign trade could weigh against continuous further appreciation, says Peng Xingyun, of the Chinese Academy of Social Sciences.
“There are many factors in the market that affect supply and demand, which, if changed, would sway the exchange rates,” says Peng.
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Renminbi’s Rise: Necessary ?
September 1, 2008
One of the most infuluantial voices in making China’s economic policies said that “China did not need to accelerate the appreciation of the renminbi against the US dollar, according to an article published in the Financial Times.
The main point needs to be highlighted in the article is:
- China doesn’t need appreciation of Renminbi anymore because the Dollar will not weaken very much, and may get stronger.
The Chinese currency has appreciated by 7 per cent against the US dollar this year. But the pace of appreciation has slowed sharply over the last two months. In August, the renminbi even depreciated slightly against the dollar. This is only the second month that this has happened since China moved away from its dollar peg in 2005.
This year, China’s trade surplus is decreasing, but foreign reserve accumulation is increasing.
According to the FT, Mr Cheng Siwei, vice-chairman of the standing committee of National People’s Congress, warned that the strength of domestic consumption could not compensate for the weakness of investment and net exports. Although the government had introduced measures in July to loosen credit and reduce export taxes, “we need to consider fiscal policy action as well”, he said.
“Government revenue in-creased by 33.3 per cent in the first half of this year. But we have many big expenses like the Olympics and the aftermath of the earthquake. So I don’t think we can put a big sum of money to expand public spending. But we have put Rmb3.5bn ($512m) into subsidising small and medium-sized enterprises.”
You can read the original article: “Renminbi rise ‘less necessary’” By Martin Wolf in London and Geoff Dyer in Beijing.
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China’s trade surplus down 9.6% in Jan.-July period
August 12, 2008
– China’s trade surplus fell to 123.72 billion U.S. dollars in the first seven months, down 13.1 billion U.S. dollars, or 9.6 percent year on year, the General Administration of Customs said on Monday.
Analysts said the fall was partly a result of China’s policies to tame surplus, but was also because of the rising prices of energy.
The European Union (EU) continued to be the country’s biggest trading partner, with two-way trade totaling 243.14 billion U.S. dollars, up 27.9 percent from January to July.
Exports to the EU rose 27.1 percent to 165.04 billion U.S. dollars, while imports grew 29.8 percent to 78.1 billion U.S. dollars, leaving a trade surplus of 86.94 billion U.S. dollars, up 24.9 percent year on year. The surplus growth, however, had decreased 29 percentage points.
Exports to the United States, the country’s second biggest trade partner, grew 9.9 percent to 140.39 billion U.S. dollars with a trade surplus of 91.67 billion U.S. dollars, up 3.8 percent year on year. The surplus growth, however, also declined by 15 percentage points.
Japan remained China’s No. 3 trade partner with bilateral trade totaling 154.93 billion U.S. dollars, up 19.2 percent.
Jan.-July trade exports to Japan reached 65.48 billion U.S. dollars, up 15.9 percent, while imports totaled 89.45 billion U.S. dollars, up 21.6 percent. This created a trade deficit of 23.98 billion U.S. dollars, an increase of 7 billion U.S. dollars over the same period of last year.
The administration said the average prices of primary products imports had soared. The country’s imports grew drastically by 70.6percent to 221.65 billion U.S. dollars in the first seven months, 32.6 percent of the total imports in the same period.
China imported 24.94 million tons of coal during the seven months with its average price jumping 51.9 percent to 70 U.S. dollars per tonnage. Imported soy bean grew to 20.73 million tons with its average prices up 78 percent to 591.70 U.S. dollars per ton.
Source: Xinhua
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