A slowing global economy, a rising yuan and the impact of the earthquake on exporters caused, China's trade surplus to fall nearly 12% in the first half of 2008, official data showed July 10. The surplus for the first six months of the year came in at $99.04 billion, with strong domestic consumption also helping to boost imports and ease the trade imbalance.
The surplus in June alone fell 20.7% to $21.35 billion, while the six-monthly fall in the surplus was just over 11.8%.
"Currency appreciation, rising costs of labor, raw materials, land and environmental protection, and the removal of favorable policies toward exports have all been eroding the competitiveness of Chinese exporters," said Lehman Brothers' Hong Kong-based economist Sun Mingchun. "On top of all these, the unfolding global economic slowdown is adding more salt to the wound."
Total trade in the first half of this year was $1.23 trillion, up 25.7% from the same period last year.
Imports from January to June grew 30.6% to $567.57 billion. Exports rose by 21.9% year-on-year to $666.61 billion.
The Chinese government said last month the nation's trade surplus was likely to shrink in 2008 for the first time in five years on weakening exports. Beijing has allowed the yuan to rise steadily from 8.3 to the dollar about three years ago when it loosened the peg to the greenback to roughly 6.85 now, placing huge pressure on Chinese exporters and making imports cheaper. The currency has appreciated by over 6% this year, however the U.S. still believes this is not fast enough, accusing China of keeping the yuan artificially weak to boost its exports.
China has also cut the export tax rebate and removed some import tariffs in a bid to narrow the trade surplus. But with many exporters being forced out of business or facing shrinking profits, some analysts said the government may have to backtrack on some of its measures to curb exports. In fact, the Beijing News reported on July 10 that China would probably announce this month a two-percent increase in the export tax rebate of textile products.
Copyright Agence France-Presse, 2008