Chinese trade surplus reaches record $18.8b

Beijing, September 11 :

China’s trade surplus hit a monthly record of $18.8 billion in August, state media said on Monday, just days before a key international meeting where the country’s currency and trade practices could be in focus.

In the first eight months of the year, the accumulated surplus hit $95.7 billion, the Xinhua news agency said, citing customs statistics. It did not immediately provide figures for year-on-year per centage growth.

China’s previous record was in July when a $14.6 billion surplus was recorded, up from $14.5 dollars in June, according to previously published statistics. The gains continue build on the momentum of the fast growing economy and after China’s trade surplus increased more than three-fold to $101.9 billion in 2005.

China’s soaring trade surplus has been an engine of growth at home but a source of complaints abroad as US and European officials have argued it has been fueled by an undervalued Chinese currency.

For the first eight months of the year, China’s overall trade increased 23.9 per cent to more than $1.1 trillion, Xinhua said. It did not provide a breakdown for import and export figures. However, the China Business News reported Monday that exports in the month soared 32.8 per cent to $90.77 billion from a year ago, with imports up 24.6 per cent at $71.97 billion.

“This is consisitent with the trend of the last few months that the surplus is rising, primiarly due to strong exports,” Morgan Stanley’s Hong Kong based China economist Andy Xie, told AFP.

“The number may be a little bit of a one-off because 32.8 per cent growth (in August exports) is not consisent with the previous month which was about 22.6 per cent, so next month I expect the growth will slow down.” The spike in August exports, which was also seen in Taiwan and South Korea, could further mean that the US economy is not slowing to the degree that many economists believe, Xie said.

“In the end, Chinese exports come from US consumer spending; that’s the bottom line and US consumers are spending,” Xie said. The data were released ahead of a key meeting of international finance ministers and central bankers in Singapore this week that is likely to see renewed calls for China to step up the pace of currency reform and allow the yuan to appreciate.

“I think they will mention China again (at the meeting) but I’m not sure that’s going to change anything,” Xie said. An editorial in Monday’s official China Daily also reflected such thinking.

“Maintaining the stability of the (yuan) exchange rate should be the focus of the macroeconomic coordination and regulation currently afoot,” the editorial said. “The exchange rate should enjoy some flexibility but there should be no sharp rise (in the value of the yuan).”