China export slump eases as global demand revives

AP News
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Posted: Dec 11, 2009 3:49 AM

China's exports fell 1.2 percent from a year earlier in November, the smallest decline this year as nascent recoveries in the U.S. and other big markets helped revive demand.

Imports into the world's third-largest economy also rebounded strongly, rising 26.7 percent over the same month last year, the Customs Administration said in reports posted Friday on its Web site.

The figures suggest the global recovery is gaining momentum as consumers in the U.S. and other countries begin spending more after months of holding back.

The meager decline in November's exports compared with a 13.8 percent drop in October and even bigger declines in previous months. Adjusted for seasonal factors, November's decline was 0.3 percent, the customs data showed, while imports rose 22.2 percent.

China's trade surplus fell to $19.9 billion in November from $24 billion in October, with exports at $113.6 billion and imports totaling $94.5 billion.

At an annual planning meeting earlier this week, China's leaders announced that supporting exports would remain a key goal of the government's stimulus policies, though they also said they would seek more balanced trade by promoting imports.

EU and U.S. officials say China's recovery means its manufacturers are in good enough shape that Beijing can afford to relax the de facto link between the renminbi and the U.S. dollar.

The sharp improvement suggests the renminbi might be allowed to gain gradually against the dollar, Jing Ulrich, J.P. Morgan chairwoman for China equities, said in a report.

But slim profit margins and tough employment conditions mean the change will likely be limited.

Recent comments by Chinese officials suggest that the positive trends have reinforced Beijing's belief in the wisdom of keeping its currency stable.

"China's trade is certainly recovering, thanks to tariff cuts and efforts to keep the currency rate stable, especially the reminbi against the dollar, said Yi Xianrong, an economist with the China Academy of Social Sciences, a government think tank.

Although China loosened its dollar peg in 2005 and allowed the currency to appreciate by about 20 percent, it has keep the renminbi's rate against the dollar steady for over a year. Critics say the policy is putting pressure on currencies of China's other trading partners, especially in Europe and Asia.

To keep the value of the renminbi, also known as the yuan, steady, China's central bank must buy huge amounts of dollars _ pushing its foreign exchange reserves to record levels and constraining its monetary policy options.

But Beijing has lashed out against such criticism, saying it has no intention of tinkering with what appears to be working well, at least for now.

"As you can see, the stable renminbi exchange rate has boosted the competitiveness of China's trading sector in the current global trading environment," Li said.

But he also said that many companies had adjusted to last year's downturn in exports by pushing hard for orders in developing markets, rather than just the U.S. and Europe.

The figures released Friday do underscore continued weakness in trade with those two regions.

China's exports to the U.S. fell 14.8 percent from a year earlier in November to $20 billion, while imports also continued to fall, by 9 percent to $7.2 billion, leaving a surpus of $12.8 billion.

Exports to the EU plunged 21.8 percent to $22.08 billion while imports dropped 6.4 percent from the year before to $11.78 billion.

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Associated Press researcher Ji Chen contributed to this report.