China's quarterly trade surplus shrinks 10.8%
Source: English Site of Cebu Date: 2008-04-14
China's trade surplus for the first quarter shrank 10.8 percent from the same period last year as export growth continued to slow, customs figures show.
The trade surplus slid to 41.42 billion U.S. dollars in the first three months this year, China Customs said on Friday.
The slump resulted from weakening outside demand caused by the unfolding U.S. sub-prime crisis, plus the effects of the severe winter weather in the country's south in January and February, said Zhang Yansheng, head of the International Economic Research Institute under the National Development and Reform Commission.
February had seen the surplus sharply down to 8.56 billion U.S. dollars. The figure rebounded to 13.4 billion U.S. dollars in March.
A rising yuan was a more significant factor in helping to narrow the trade gap, said foreign trade expert Zhang Junsheng, of the University of International Business and Economics.
The appreciation has accelerated, with the yuan's central parity rate against the U.S. dollar reaching 6.992 on Thursday and breaking the 7-yuan mark for the first time since the government unpegged it from the dollar in 2005.
"The pace of appreciation was too fast, dealing a heavy blow to small and medium-sized Chinese exporters," said Zhang Yansheng.
Compared with the first quarter last year, Chinese exports rose21.4 percent to 305.9 billion U.S. dollars, 6.4 percentage points lower.
Slowing exports dragged down the U.S. trade deficit with China in February by a monthly 9.6 percent to 18.4 billion dollars as the total deficit rose to 62.3 billion dollars, according to figures released by the U.S. Commerce Department on Thursday.
Major trade partners of China, including the United States have pressed for the yuan's rise, arguing an undervalued yuan made Chinese exports artificially cheap and brought with them huge deficits for importing nations.
Zhang Junsheng forecast the trade surplus would continue to fall in the second quarter, but with a smaller margin, as pressure for a stronger yuan would ease. "The surplus slump was no surprise," said Zhang Yansheng, noting that China's trade policy adjustments adopted last year had begun to take effect.
The government has curbed exports of certain items by cutting export rebates or imposing export taxes. Higher costs for exporters amid rising inflationary pressure also contributed to lower export growth, said Zhang Yansheng.
China's consumer price index saw its biggest jump in nearly 12 years in February, up 8.7 percent over February last year.
Meanwhile, imports have soared, driven by stronger domestic demand. Imports in the first quarter jumped 28.6 percent to 264.5 billion U.S. dollars, 10.4 percentage points up from the same period last year.
The value of imported products like crude oil, automobiles and automobile chassis, iron ore sand and soybeans all soared more than 90 percent in the first quarter, customs figures show.
The total trade volume stood at 570.4 billion U.S. dollars, a rise of 24.6 percent. A slackened increase in exports, which has been a major growth engine for China, would slow the national economy down, said experts. The negative effect could be offset this year, as the upcoming Olympiad would boost the country's tourism and newly-elected local government leadership might spark a rebound of fixed-asset investment, said Zhang Yansheng.
"It will be a huge test to China's economy next year," he said.
The Asian Development Bank last week predicted China's economic growth would moderate to about 10 percent this year and 9.8 percent in 2009 because of "an expected tighter domestic monetary policy and weaker external demand".
Zhang Yansheng expected the government to maintain a tight monetary policy to rein in inflation but relax the fiscal policy to ease export woes. "A hard-landing of China's economy must be avoided," he warned.
The National Bureau of Statistics revised on Thursday the country's gross domestic product (GDP) value for 2007 after a routine preliminary verification, raising the annual GDP growth to11.9 percent from 11.4 percent, the highest level in 13 years.
