Yuan’s strength slows China’s ex­ports

Over­all for­eign trade rose by 10.1 per­cent: cus­toms data

Global Times - Weekend - - NATION - By Xie Jun

The yuan’s con­tin­ued strength slowed the growth of China’s ex­ports in Au­gust.

Data from the Gen­eral Ad­min­is­tra­tion of Cus­toms on Fri­day shows the coun­try’s ex­ports surged by 6.9 per­cent to 1.35 tril­lion yuan ($209 bil­lion) in Au­gust from the same pe­riod last year, a sharp drop from the 11.2 per­cent growth seen in the pre­vi­ous month.

China’s im­ports surged by 14.4 per­cent in Au­gust. Over­all, the coun­try’s trade surged by 10.1 per­cent on a yearly ba­sis, cus­toms data showed.

Zhou Yu, di­rec­tor of the Re­search Center of In­ter­na­tional Fi­nance at the Shang­hai Academy of So­cial Sciences, said that the strength­en­ing yuan af­fected ex­ports growth.

The yuan’s cen­tral par­ity ex­change rate reached 6.5032 on Fri­day, up 237 ba­sis points. The rate was the high­est since May 12, 2016. As of Fri­day, the yuan had been surg­ing for nine con­sec­u­tive trad­ing days.

The yuan had been de­pre­ci­at­ing since mid-2015, when the gov­ern­ment launched re­forms to the cen­tral par­ity ex­change rate mech­a­nism. But the trend re­versed this year, and the cur- rency has risen by about 6.4 per­cent so far in 2017.

“The yuan has been surg­ing too fast. It’s bad for the do­mes­tic econ­omy,” Zhou noted. An ap­pre­ci­at­ing yuan cre­ates a neg­a­tive im­pact on ex­ports.

The gov­ern­ment has taken mea­sures to curb the yuan’s rise, as shown by the ris­ing for­eign cur­rency re­serves in re­cent months. But the yuan con­tin­ues to rise, which means that there is up­ward pres­sure on the cur­rency, Zhou said.

China’s for­eign cur­rency re­serves have reached $3.09 tril­lion, data from the Peo­ple’s Bank of China, China’s cen­tral bank, showed on Thurs­day.

“The gov­ern­ment took mea­sures to re­duce the range of the yuan’s fluc­tu­a­tions, but not to com­pletely re­verse the cur­rency’s trend,” Zhou said, adding that the yuan’s ap­pre­ci­a­tion shows that China’s pre­vi­ous mea­sures to con­trol cap­i­tal out­flow have worked.

An ap­pre­ci­at­ing yuan doesn’t nec­es­sar­ily mean that China’s ex­ports will be ru­ined, as a strong over­seas de­mand can off­set this, said Zhou.

The China Mer­chants Se­cu­ri­ties said in a state­ment it sent to the Global Times on Fri­day that it’s highly prob­a­ble that ex­ports will pick up in Septem­ber and Oc­to­ber.

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