Chinese exports rose strongly

03-11-2010 09:45

Chinese exports rose by 46% last month in comparison to last year, increasing expectations for a major improvement in worldwide trade. The rise exceeded analysts’ expectations who forecasted an increase between 35% and 40%. This will probably lead to more pressure on the Chinese administration to upgrade the value of the Yuan. Particularly the US believes that the Yuan is underrated.

Chinese imports

In the meantime, Chinese imports jumped sharply, rising by 44.7% in February. Imports rose strongly as a result of the government’s crisis support measures. The growth in imports decreased the Chinese trade surplus to the lowest in twelve months of €5.2 billion last month.

Yuan

In order to support exporters, China’s government didn’t change the rate of the Yuan versus the Greenback during one and a half year. The ‘undervalued’ Yuan has frustrated the North American country, which claims that China’s administration maintains the low rate of the Yuan, creating unfair trade conditions. For that reason, the US persists that the Chinese government allows the Yuan to move without restraint, enabling it to show its actual market value.

Yuan revalue

IHS Global Insight economist Ren Xianfang commented: “Beijing will be more confident to revalue the nation’s currency, as the economic improvement seems to have accelerated.”
Nevertheless, Zhou Xiaochuan, governor of the Central Bank of China, stated that Beijing was “extremely conservative” with regard to lowering the rate of the Yuan considering the economic prospects that remain unclear.

China’s exports

Despite the fact that exports rose strongly last month, the contrast with February last year, when shipments dropped by 25.7%, had a major impact on the figure, according to economists.

Five business days less

Nevertheless, although factories in China were closed five days due to the Chinese New Year festival, exports rose strongly in February. In 2008, the celebration of the Chinese New Year was in January.
Brian Jackson, senior strategist for the Royal Bank of Canada, noted: “February 2010 had five business days less than 2009, and for that reason the export results are even more remarkable.”