Foreign trade growth points to healthy China economy - analysts

13 September 2011 06:29  [Source: ICIS news]

GUANGZHOU (ICIS)--China’s better-than-expected growth in foreign trade in August is confirmation that the world’s second-biggest economy is healthy, analysts said on Tuesday.

The trade figures allay concerns over a sharp slowdown in domestic demand, they added.

China’s imports increased by 30.2% year on year to a historical high of $155.6bn (€113.6bn) in August and its exports increased by 24.5% year on year to $173.3bn in the month, according to statistics released by China Customs on the weekend.

China’s trade surplus in August narrowed to $17.8bn from July’s $31.5bn, while its total trade surplus in January-August decreased by 10.0% year on year to $92.7bn, said China Customs.

“The data provide more confidence to the growth. Despite problems in financial markets, China still posted a high export growth, suggesting that its products remain competitive in global markets. Meanwhile, the import numbers confirmed the strength of domestic demand,” said Zhang Junfeng, an analyst at Shenzhen-based broker China Merchants Securities.

The trade surplus is likely to narrow further in the rest of the year and therefore, the pressure on yuan appreciation will be relaxed, analysts said.

“The export growth is expected to soften in the coming months on the weakness of developed markets, while the import growth is also likely to slow down on softening processing trade. However, the import growth would outpace that of export consistently on strong domestic demand,” Zhang said.

Looking forward, China will face increasing challenges in maintaining growth considering the economic uncertainties in the US and Europe and turbulences in global financial markets, according to analysts.

“We expect the world’s second-biggest economy to remain a growth engine, but the likely slackness in much of the rest of the world will slow down its pace,” Zhang said.

($1 = €0.73)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy


By: Fanny Zhang
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