Trade surplus falls to lowest since May

By Diao Ying (China Daily)
Updated: 2008-02-16 09:52

The country's trade surplus last month continued its downward trend, with efforts to curb exports paying off and imports rising, authorities said on Friday.

Figures from customs authorities showed the trade surplus last month was $19.49 billion, below December's $22.7 billion and the record high of $27.1 billion set in October last year.

"For the first time since May, the trade surplus is under $20 billion," customs said on its website.

Exports rose 26.7 percent from a year earlier to $109.66 billion, while imports rose 27.6 percent to $90.17 billion, the government agency said. Import growth outpaced exports for the fourth month in a row.

Experts said the surplus dropped due to policies put in place last year to curb exports. The authorities had introduced a raft of policies since early last year, including VAT cuts, to discourage exports of energy-intensive, polluting products.

"China's policies to encourage imports and cut the trade surplus are also helping a lot," Zhang Xinfa, an economist with Beijing-based China Galaxy Securities, said.

As a result of the tightening policy, the processing trade last month was $81.85 billion, up 15.8 percent year on year. But the growth rate slowed by 9.9 points compared with the same period last year.

The appreciation of the yuan also played a role in curbing exports.

"Many exporters are facing difficulties due to rising costs and the yuan's appreciation, and export momentum will ease in the coming months," Li Yushi, a researcher on trade with the Ministry of Commerce, said.

According to Li Peng, spokesman for Asia Footwear Association, more than 1,000 shoe factories in Guangdong province closed down last year.

The firms went bankrupt due to high costs driven by the removal of an export tax refund, a stronger yuan, rising raw material prices and labor costs, Li said.

The stronger yuan also makes imports cheaper, which is one reason behind the strength seen in Friday's data, Zhang said.

The European Union remained as China's largest trade partner last month, with bilateral trade of $34.28 billion, up 30.1 percent year on year.

The EU was followed by the United States. Trade between China and the US last month increased by 12.2 percent year on year to $26.23 billion, despite looming recession in the US economy.

China's trade surplus last year stood at $262.2 billion, with total trade volume hitting a new high of $2.17 trillion, up 23.5 percent from a year earlier.

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