Global News
The global reach of the economic turmoil in Europe and the United States was underlined Thursday by weaker-than-expected export data from China and by a warning from the International Monetary Fund that Asia could suffer “dear” financial and economic spillovers if the U.S. and European troubles grew.
Trade data from China for September, released by the customs office, showed that the countrys booming pace of export growth had begun to ease as global upheaval and a gradual rise in the value of the renminbi had taken their toll.
Both exports and imports still rose solidly last month – up 17.1 percent and 20.9 percent, respectively, compared with the levels of a year earlier, showing that trade had by no means collapsed.
Chinas trade surplus narrowed to $14.5 billion in September, from S17.8 billion in August. But the slimmer surplus was unlikely to defuse fully the criticism of U.S. lawmakers who argue that Beijing is keeping the renminbi unfairly low against the dollar.
On Tuesday, the U.S. Senate passed a bill that would impose tariffs on certain Chinese goods if the Treasury Department determined that China was undervaluing its currency to its advantage.
“We think the probability of this currency bill being turned into a law remains very low, given the public opposition already voiced by the U.S. president
“This standoff is likely to continue distorting the short-term path of the yuan, as China does not appreciate the U.S.V attempts to bully it.”and leading House Republicans,” Yao Wei, an economist at Societe Generale in Hong Kong, said in a research note. “However, this standoff is likely to continue distorting the short-term path of the yuan, as China does not appreciate the U.S.s attempts to bully it.” Yuan is another name for the renminbi.
Beijing has allowed a gradual appreciation in the renminbi since mid-2010. But the authorities are resisting calls for a faster rise in the currency, in part because they resent the pressure from the United States and in part because they fear it would hurt Chinese exporters.
Lu Peijun, the deputy head of the Chinese customs administration, underlined that point Thursday “The rise in renminbi exchange rate may limit the room for export growth,” he said, according to Reuters.
Although the Chinese economy is growing less rapidly, many economists say China is headed for a gradual slowdown, rather than a sharp, shocking halt.
Still, the September trade figures were below what economists had been expecting and represented a marked slowdown from August, when exports rose 24.5 percent and imports 30.2 percent.
The figures highlighted the way the upheaval generated by the debt crisis in Europe and by the feebleness of the U.S. economy was hurting trade activity around the globe.
“Although Chinese exports remain close to record levels, some impact from weaker global growth was to be expected, and the fall in year-on-year growth in September suggests this is starting to happen,” Brian Jackson, an emerging markets strategist at Royal Bank of Canada in Hong Kong, commented in a note to clients.
This partly reflects not only slower growth in major trading partners but also a recent loss of competitiveness for Chinese exporters as a result of currency shifts, he added.
The International Monetary Fund, meanwhile, echoed the general sense of worry about the global outlook Thursday, tempered with a degree of confidence about Asian domestic demand, which is helping to cushion the region from the global upheaval.
“Domestic demand is still resilient, and it should continue to sustain activity across the region,” the I.M.F. said in its regional economic outlook for the Asia-Pacific region.
The fund forecast relatively robust growth of 6.3 percent for the region this year and 6.7 percent in 2012 on average, slightly below a previous forecast of 6.8 percent for 2011 and 6.9 percent for 2012 made in April.
Nevertheless, it stressed that an increase in financial turbulence in the euro zone and a more severe slowdown in the United States would have “clear macroeconomic and financial spillovers to Asia.”
“Asia has clearly not decoupled from advanced economies.” the I.M.F. said.
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By: Bettina Wassener
Source: Bataviase, October 14, 2011
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