china's export boom continues raging

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    Trade surplus tops US$10b as exports surge to record

    China's trade surplus was the third highest on record in August as export growth outpaced imports for the 10th month in a row.

    Tuesday, September 13, 2005

    China's trade surplus was the third highest on record in August as export growth outpaced imports for the 10th month in a row.

    The surplus reached more than US$10 billion (HK$78 billion), compared with US$10.55 billion in July and US$4.52 billion a year earlier, the Beijing-based customs bureau said on its Web site. Exports in August surged 32.1 percent to a record US$67.8 billion and imports increased 23.4 percent, also reaching an all-time high.

    Lawmakers and manufacturers in the United States and European Union, China's two biggest overseas markets, say Chinese exporters benefit from government subsidies and an artificially weak currency. The two economies have already restricted textile imports from China and the United States is threatening more sanctions unless China allows the yuan to trade more freely.

    China's trade surplus for the first eight months of the year was US$60.2 billion, up from US$50 billion in the first seven months and nearly double the US$32 billion reported for the whole of 2004. The commerce ministry said last month the surplus may swell to a record US$80 billion this year, while the Manufacturers' Alliance, a US manufacturing research group, estimates the figure could reach US$140 billion.

    China's exports of goods including steel, mobile phones and home appliances are surging as companies look for overseas markets to soak up the excess capacity created by a two-year investment boom.

    Clothing and accessories exports rose 22 percent to US$46.6 billion in the first eight months, the customs bureau said. Exports of textile yarns and fabrics rose 25 percent to US$26.6 billion, and those of shoes increased by a similar proportion to US$12.5 billion.

    Crude oil imports in the first eight months rose 3.9 percent to 83.1 million tons, the bureau said. Vehicle imports in the first eight months fell 24 percent to 94,000 units, while steel imports fell 21 percent to 17.5 million tons.

    China's total exports in the first eight months of the year rose 32 percent to US$475.7 billion and imports increased 14.9 percent to US$415.5 billion. August's export growth was the fastest in five months and exceeded the median 27.8 percent gain forecast in a Bloomberg survey of 14 economists.

    Shipments to the EU rose 39 percent in the first half of this year, while imports from the 25-nation bloc rose 2 percent, according to EU data. The EU and the United States together account for about two-fifths of China's exports, according to Chinese data.

    China's July 21 revaluation of the yuan has not satisfied US politicians who accuse the government of deliberately undervaluing the currency to give its exporters an unfair competitive advantage.

    The US trade deficit with China widened to US$90 billion in the first half from US$68 billion a year earlier, according to US data.

    China is now the world's biggest producer of mobile phones, laptop computers and printers after companies including Quanta Computer and Motorola expanded production to take advantage of low labor costs. China's exports of mechanical and electrical products, which include computers, mobile phones and household appliances, rose 35 percent to a record US$36.9 billion in August after gaining 31 percent in July, the commerce ministry said Monday.

    The strong export growth indicates that higher oil prices have so far not resulted in weaker demand for Chinese- made goods, said JPMorgan Chase economist Ben Simpfendorfer, who predicts the Asian nation's monthly trade surplus will balloon to an average US$16 billion in the final quarter.

    China's imports amounted to a record US$57.8 billion in August, the customs bureau said. Purchases from abroad are expected to climb further as manufacturers restock after running down inventories, Goldman Sachs Group economist Hong Liang said.

    The country's consumer inflation rate rose in August at its slowest pace in almost two years, raising concerns that deflation is emerging as a threat.

    The Consumer Price Index rose 1.3 percent from a year earlier compared with an increase of 1.8 percent in July, official data showed. It was the lowest growth rate for a single month since September 2003 when the CPI rose by only 1.1 percent year-on-year.

    BLOOMBERG, AGENCE FRANCE-PRESSE

 
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