China's Trade Surplus Shrinks in September

Oct. 13, 2010
Exports rose by 25.1% compared to 34.4% in August and imports rose by 24.1% compared to 35.2%.

China's trade surplus fell to $16.88 billion in September from $20.03 billion in August, and was the lowest surplus in five months, customs authorities said on Oct. 13.

Exports rose by 25.1% in September year-on-year to $144.99 billion, compared with an increase of 34.4% in August, the data showed.

Imports rose 24.1% on-year in September to a record high of $128.11 billion, but slower than the 35.2% growth recorded in August, the report said.

The slower growth was due to the high base effect last year rather than weakness in the global economy, Bank of America-Merrill Lynch analyst Lu Ting said.

The figures come as China set the yuan's central parity rate -- the middle of the currency's allowed trading band -- at 6.6693 to the dollar, its strongest since a June promise of limited currency reform.

But the data is unlikely to calm angry U.S. and European lawmakers, who are demanding that China let the yuan appreciate faster against the dollar. "I think the pressure is still going to be there," Brian Jackson, a strategist at Royal Bank of Canada, said. "I think the fact that their exports are still very strong suggests that there's plenty of scope for them to do more on the currency."

Some critics claim the yuan is undervalued by as much as 40%, giving Chinese exporters an unfair advantage by making their shipments artificially cheap. Beijing vowed in June to let the yuan trade more freely against the dollar. Since then, the currency has advanced around two percent against the greenback.

Recent currency interventions by nations ranging from Japan to Colombia have sparked fears of a global currency war and the Chinese trade data has done little to ease those concerns, analysts said.

"China's overall trade surplus may have declined slightly last month, but tensions are unlikely to do the same," said Mark Williams, a London-based economist at Capital Economics.

Copyright Agence France-Presse, 2010

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