China's July trade surplus rockets to record $47.3bn

GMT 05:52 2014 Friday ,08 August

Arab Today, arab today China's July trade surplus rockets to record $47.3bn

Workers handle containers at a port in Qingdao
Beijing - AFP

China's monthly trade surplus leaped to a record $47.3 billion in July, nearly tripling year-on-year, official data showed on Friday, as the world's second-largest economy saw export growth accelerate while imports surprisingly shrank.
Exports increased 14.5 percent year-on-year to $212.9 billion, the General Administration of Customs announced, while imports decreased 1.6 percent to $165.6 billion.
The surplus, which compared with one of $17.8 billion during the same month last year, beat China's previous record monthly surplus of $40.1 billion in November 2008 and far exceeded the median forecast of $27.7 billion in a Wall Street Journal survey of 15 economists.
Analysts said the figures could lead to upward pressure on China's yuan currency, also known as the renminbi (RMB), whose value is closely controlled by the authorities.
Export growth accelerated from June's gain of 7.2 percent and beat expectations of 8.0 percent.
However imports, which had gained 5.5 percent in June, failed to match the forecast of a 3.0 percent increase.
ANZ Bank economists Liu Li-Gang and Zhou Hao said in a note that the surplus suggested "the appreciation pressure on RMB will likely increase" if the central bank does not intervene "actively" in the foreign exchange market.
The statistics are in line with others in the region implying that "demand from the advanced economies has been improving", they added.
The surprise fall in imports was mostly attributable to a crackdown on fraudulent commodity financing that came to light earlier this year, they said.
State media reported in June that a Chinese mining group allegedly used the same commodity stocks as collateral for loans of more than $2.5 billion from different banks.
China's trade statistics are occasionally prone to distortions related to the timing of seasonal holidays such as Lunar New Year as well as over-reporting of exports.
- Growth target -
July's mixed results come as China's economic activity has picked up steam since authorities introduced measures to shore up growth after it slowed at the beginning of the year.
China's gross domestic product (GDP) accelerated to a higher-than-expected 7.5 percent in the second quarter, up from 7.4 percent in the previous three months, which was the worst since a similar 7.4 percent expansion in July-September 2012.
The government in March set its annual GDP growth target for 2014 at about 7.5 percent, the same as last year.
The target, which is set conservatively and usually exceeded, is closely watched by economists as a weathervane for official expectations about the economy.
China's leaders are trying to shift the country's economic model to one where its increasingly affluent consumers propel economic growth rather than large, state-supported investments.
But since April, in a bid to boost growth, authorities have introduced measures including tax breaks for small enterprises, targeted infrastructure outlays and incentives to encourage lending in rural areas and to small companies.
The trade data came after surveys of China's manufacturing sector showed that activity increased sharply in July, with the official purchasing managers' index (PMI) reaching its highest level in more than two years. A closely watched private PMI survey came in at an 18-month high.
Despite recent signs of vigour in the economy, economists have expressed concern about the potential for China's vast and opaque property sector to dent growth expectations.
An independent survey of China's property prices showed that their decline accelerated in July. The average price of a new home in 100 major cities was 10,835 yuan (now $1,797) per square metre, down 0.81 percent from June, the China Index Academy said.
It was the third consecutive monthly decline and an acceleration from the falls of 0.50 percent in June and 0.32 percent in May, which was the first in nearly two years, according to the academy's data.
Property is sensitive in China, where the government must balance the need to satisfy citizen demands for affordable housing against the reality that local governments make much of their income from land sales to developers

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