China’s export growth slows
September 11, 2017 Category China News Round-up, Weekly
Data from the General Administration of Customs shows China’s exports surged by 6.9% to CNY1.35 trillion in August from the same period last year, a sharp drop from the 11.2% growth seen in the previous month. China’s imports surged by 14.4% in August. Overall, the country’s trade increased 10.1% on a yearly basis, customs data showed. The monthly trade surplus was CNY286.5 billion, down by 14% year-on-year. In the first eight months, exports rose by 13% year-on-year, while the growth rate of imports was 22.5%.
Zhou Yu, Director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, said that the strengthening yuan affected exports growth. The yuan’s central parity exchange rate reached 6.5032 on August 8, up 237 basis points. The rate was the highest since May 12, 2016. The yuan had been depreciating since mid-2015, when the government launched reforms to the central parity exchange rate mechanism. But the trend reversed this year, and the currency has risen by about 6.4% so far in 2017. “The yuan has been surging too fast. It’s bad for the domestic economy,” Zhou noted.
The government has taken measures to curb the yuan’s rise, as shown by the rising foreign currency reserves, which have reached USD3.09 trillion. “The government took measures to reduce the range of the yuan’s fluctuations, but not to completely reverse the currency’s trend,” Zhou said, adding that the yuan’s appreciation shows that China’s previous measures to control capital outflow have worked.
China Merchants Securities said it is highly probable that exports will pick up in September and October, the Global Times reports.
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