Yuan under pressure from record trade surplus

Friday, 11 November 2005 11:10:08 (GMT+3)   |  
       

Yuan under pressure from record trade surplus

In October, China’s monthly trade surplus reached hit a record $12.01 billion, up $4.43 billion compared to September. China’s trade surplus through the first ten months of the year, $80.4 billion, has already more than doubled 2004’s full-year total of $31.98 billion. According to the latest statistics from China’s General Administration of Customs, the import and export volume in the first ten months was up 24 percent year on year at $1.14861 trillion; 2004’s full-year total was $1.15479 trillion. Export volume through October of this year was $614.49 billion, up 31.1 percent year on year, while that of import was $534.12 billion, up 16.7 percent. During the first ten months, China had five trade partners with whom bilateral trade volume surpassed $100 billion. Those partners were the EU, the US, Japan, Hong Kong and ASEAN members. At this time last year, China had bilateral trade in excess of $100 billion with only the EU, the US and Japan. With the development of the Sino-ASEAN free trade zone, the trade volume between China and ASEAN members went up considerably. During the first three quarters, trade volume between China and ASEAN members totaled $94.54 billion, up 25.3 percent year on year. By the end of October, bilateral trade volume had increased 24.4 percent year on year to reach $105.24 billion, close to last year’s full-year total of $105.9 billion. The EU topped the list as China’s main trading partner, accounting for a trade volume of $176.29 billion, up 24.1 percent. The US was next with $172.31 billion (up 26.2 percent), followed by Japan with $149.87 billion (up 10.4 percent) and Hong Kong with $107.1 billion (up 20.9 percent). The jump in the monthly trade surplus in October is sure to impose appreciation pressure on the yuan. In July, the trade surplus was $10.4 billion. After the revaluation in late July, the trade surplus in August and September was $10.04 billion and $7.57 billion respectively. The September trade surplus was the lowest since May, and this was regarded as a benign response to the revaluation of the yuan. This was also regarded by the market as a signal that pressures for further appreciation of the yuan were decreasing. Officials from the central bank agreed on that point as well, pointing out in their third-quarter report that anticipation of further appreciation had weakened and that the influx of foreign reserves had slowed. However, the trade figures released by Customs on October 31, almost 100 days after China’s revaluation of the yuan, could renew pressure on Beijing to let the yuan further appreciate. SteelOrbis Shanghai

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